Stock Market Update | April 2022

Stock Market Update | April 2022

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Stock Market Update April 4th, 2022

Wondering why the market rallied so much in March of 2022, how rising interested rates has historically affected the stock market, and which kind of investments have provided the greatest returns? Tune in for this month’s Stock Market Update with Steve Wolff as he answers these burning questions.  Click here to schedule a consultation

 

 


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Reference Sources:

After a key yield curve inversion, stocks typically have another year and a half before doom strikes

March, First Quarter 2022 Review and Outlook


DISCLAIMER:

WWM Financial is an SEC- Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where WWM Financial and its representatives are properly licensed or exempt from licensure. Investing involves risk and possible loss of principal capital. No advice may be rendered by WWM Financial unless a client service agreement is in place.

 


Full Transcription Below:

Steve Wolff:

This is Steve Wolff with the Monthly Market Report for March of 2022. Talk about March Madness. This is one of the weirdest months that I’ve seen in a long time. In the middle of March, things turned around for this market. Matter of fact, this market to me was bananas. Just bananas.

Steve Wolff:

What happened is, in the beginning of the month, the markets were going down and they were going down precipitously, as they had been doing for the first part of the year, especially the small stocks, especially the growth stocks.

Steve Wolff:

Well, March 15th came and the Ides of March I guess that must have done it for those of you who are Shakespeare aficionados, you’ll know what I’m talking about. For others of you, it was the middle of March, and the stocks wow they turned around. So before I get to all the things that happened in there, I want to give a little disclaimer here which we have to do for every one of these videos that we do.

Steve Wolff:

What I am about to say is strictly for informational purposes and it’s not meant to be recommendation. So before you buy or sell anything relating to anything I am saying about the markets or individual securities or maybe even the game that is going to be on tonight, be sure to consult your financial advisor. It’s probably best for your personal situation and you can make…he can make a recommendation or she can make a recommendation for you.

Steve Wolff:

By the way, there is a game tonight by the time you see this, this game will be over. But it’s March madness Kansas is playing against North Carolina and it is going to be a barn burner. In the meantime, what happened in March? For the month of March the S&P was up about 3.6%, the DOW was up about 2.2% and the NASDAQ was up about 3%.

Steve Wolff:

But for the quarter so January, February, March the S&P was down about 4.9%, the DOW was down about 4.6% and the NASDAQ was down about 9%. Now that only tells part of the story, because the small stocks and the growth stocks but especially the small stocks were down by a lot more. In the first quarter the Russel Growth 1000 which is a thousand stocks that were growth oriented were down about 9%. And the 2000, the Russel Growth 2000 stock index was down about 13%.

Steve Wolff:

Now the Microcap stocks based on the Russel Microcap Index was down about 15% for the quarter but both the Russel 2000 and the Microcap Russel Index were up about 1% for the month of March. So putting it, there’s a lot of statistics that I’m giving you. Putting it another way things were really coming down and then there was a rebound. Starting the middle of March a lot of these stocks came back.

Steve Wolff:

Here is something that, that’s an interesting statistic. At the lows the NASDAQ, the Russel 2000 which is small caps and the Microcaps were down a lot, and this is from their 52 week highs. The NASDAQ from its 52 week high which was around the middle of November and peaked out or you know valleyed out, whatever you want to call it, at 20% down in March. The Russel 2000 was down by about 23% and the small cap microcap index, Russel Index was down 25% from its high to its low. So they did make a nice rebound at the end of March.

Steve Wolff:

Fortunately that happened so the quarter itself really wasn’t as bad as it could have been. Dividend stocks were a great place to be and have been a great place to be and I think the fact that the dividends keep coming in they keep- A lot of companies keep raising their dividends has been a terrific thing to happen. In the meantime, Ukraine keeps going on as far as the war with Russia, there’s a lot of stuff going on there. Russia we thought, a lot of people thought would win that war in days we are now up to something like 40 or 45 days now since this started. And Russia is now pulling back a little bit. I think, from what I’m hearing, they may be regrouping who knows what’s going to happen again.

Steve Wolff:

Between that and inflation, the oil price has been up. It’s been a tough place for the individual small investor. Matter of fact I think the small guys are getting hurt a lot because I just filled up my car with gas and around here, even at Costco, the gas was about five dollars and 50 cents a gallon. So, that is hurting people. Also the FED in March started raising interest rates. How much that’s going to go from here I don’t know, how many times they are going to raise it I don’t know. But I would think it’s going to be a few times.

Steve Wolff:

Well between raising of interest rates and higher inflation, higher oil prices the little guy is really getting squeezed. The interesting thing that’s happening right now is the interest rate curve is starting to invert. In other words a normal curve is when rates are set the near-term rates are usually lower than the long-term rates because there’s more risk in the long term rates.

Steve Wolff:

But right now it looks like it’s starting to go another way. The two year bond is now actually higher than the ten year. So as far as interest rates are concerned that’s concerning for a lot of people, because when a curve gets inverted,a lot of times that means that there’s going to be a recession at some point in the future. Now it’s not a guarantee but it does happen. And it happens more often than not.

Steve Wolff:

Now what does that mean as far as the stock market is concerned? The interesting part about that, from an article that I just read, from the time that the yield curve actually inverts and we are still not quite there because the really short term treasuries are still lower than the long. So the curve is going in your direction this way, instead of this way. So, when it starts going the other way that’s when we are going to worry about it. The interesting thing about stocks is that it takes about seven months to maybe up to three years, from what I’ve just read, before we actually go into a recession.

Steve Wolff:

In the meantime, stocks have actually done well, historically, during the time from the time that rates invert to the time that the recession actually happens. My opinion is that a lot of the stocks, especially the growth and small stocks have already put in a pretty good sized loss and maybe the bottom, I think it could be the bottom where we hit in the middle of March. Doesn’t mean that stocks can’t pull back gain. But that was pretty significant for many, many stocks.

Steve Wolff:

The value stocks help up better, the dividend stocks held up better so we will see what happens. In the meantime whether we going to be in a bull or bear market obviously we’ve had a bear market in parts of the market, meaning bear market meaning things are down. The bull, from last time you saw me was down like this and he’s kind of sitting up again, who knows maybe we’ll get back to bull market who knows.

Steve Wolff:

I do have a fortune telling little crystal ball here that my wife gave me many years ago and it’s got a bull and a bear here. If I could look into it and really see what the future is going to be I could tell you, but it’s still kind of cloudy. But it does say something about Auntie Almond here and Dorothy and Kansas who is playing tonight in case I didn’t tell you that. You already know who won, but I’m rooting for Kansas so we will see what happens. In the meantime we’ll see what happens in April, I have no Idea what will happen in this month hopefully it will be a good month.

Steve Wolff:

By the way April is the best month of the entire year for stocks, historically. Now whether that happens this year or not, who knows. But April has always been a good month. Unless, you are paying a lot of taxes, which a lot of us are. In the meantime, I will see you next month where we will recap March. Now until then, happy investing.

Stock Market Update | November 2021

Stock Market Update | November 2021

Click on the image above to watch November's Stock Market Update.

Stock Market Update 11/5/2021

What is going on with the stock market? Is the stock market still in-tact?

Steve Wolff, Managing Partner at WWM Financial, dives into what has occurred in October and where we are currently with the stock market.

Steve discusses company earnings, large cap stocks vs. small cap stocks, inflation, supply chain issues and what this holiday season could potentially look like.


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WWM Financial is an SEC Registered Investment Advisor.

Stock Market Update 10/6/2021

Stock Market Update 10/6/2021

Click on the video above to watch September's Stock Market Update.

Stock Market Update 10/6/2021

In this month’s Stock Market Update, Steve Wolff (Managing Partner) summarizes what has occurred in September. This ranges from market indices, bond yields, inflation, value vs growth stocks, the Evergrande drama and supply chain issues, government funding, etc.

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To get your free report, click here.

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Schedule a Consultation, click here.

WWM Financial is an SEC Registered Investment Advisor.

Stock Market Update 8/4/2021

Stock Market Update 8/4/2021

Click on the video above to watch August's Market Update.

Stock Market Update 8/4/2021

In this informative yet brief market update, Steve Wolff discusses amazing stock earnings, the Delta Variant and mortgage rates.

Transcript below:

This is Steve Wolff, and we’re going to talk a little bit about what happened in July of 2021, and we’ll do our Monthly Market Update. So this was the month that the COVID variant seems to have made its reappearance. There’s a lot of talk about, should you wear a mask? Should you not wear a mask? People getting vaccinated, et cetera, and that’s had an effect on the market. Earlier in the month, the marketplace actually had one day that was really bad, but then it seemed to come back. I’m not convinced yet that the COVID virus coming back at all is going to really affect the stock market, but it has affected it a little bit so far.

What happened this month? Well, bond yields actually went down a little again, which means mortgage rates are once again on the table. If you haven’t refinanced your mortgage, you might think about doing that right now. I’m seeing rates that you can get under 3%, and that’s pretty cheap. People today think when rates go to 4% that that’s expensive, or 3.5%. I can only tell you that my first house way back when, I had a 10 and three quarters percent mortgage rate. I’m sure some of the people who are watching here, who are older, will remember that; so when we’re talking about 3%, in my opinion, that’s really low.

What else happened? Stock earnings. Stock earnings this month, they’ve really been great. I mean, they actually outperformed high expectations. Now, some of the stocks have pulled back a little bit because I think even with high expectations, you had stocks that ran a little bit maybe ahead of themselves. But that’s okay. They reset a little bit. We talked about this before. I still think that we’re still in the midst of a bull market. As you can see my little friend, Mr. Bull over here, who’s still hanging on. I think that we’re going to be hanging on here for a little bit longer.

Interestingly though, when you’re looking at the stock market, you really should differentiate between the “market” and really what it represents. For instance, what I’m talking about here is that in the S&P 500, the top five stocks make up about 22% of the portfolio, and the top 10 stocks in a 500 stock portfolio represent somewhere around 30% of the portfolio. So really, when you’re talking about the market, you’re really talking about maybe 10, 15, 20 stocks having a big mark on what’s going to happen as far as the markets, and what they’re going to do. So, I would actually look at individual stocks.

When I look at big tech and big online retailers, their earnings were outstanding. They really were. A matter of fact, it’s hard to believe. Usually, you say, in the ocean, the battleship, it takes a long time to turn it around. A rowboat, you can turn real fast. Yet, these huge behemoths of companies have just been… terrific. Until that changes, I still think that the bull market is intact. I don’t see any reason to change where we’ve been for the last couple of months. That’s where we’re at. Mr. Bull, you’re still hanging on and we love it. We’ll talk to you next month. Thanks.

 

Steve Wolff is a Managing Partner at WWM Financial in Carlsbad California.

Steve can be reached at 760-692-5190.

Disclaimer

The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

WWM Financial is an SEC Registered Investment Advisor. Advisory services are only offered to clients or prospective clients where WWM Financial and its representatives are properly licensed or exempt from licensure. No advice may be rendered by WWM Financial unless a client service agreement is in place.

 

 

What’s Behind the Market Decline

What’s Behind the Market Decline

What’s Behind the Market Decline

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By Steve Wolff

Now for the understatement of the day…volatility has returned to the stock market.

Why has the stock market gone down with such force in the last week? I think there are a few reasons.

  1. Profit taking. Stocks had run up extremely quickly over the last year or so, especially in January when the indices were up by around 8%. So it is normal for profit taking to occur.
  1. Rising interest rates. Some investors have been spooked by the rise in interest rates. The 10-year government bond has risen to around 2.9%. They also believe the Federal Reserve is going to raise rates 3 or 4 times this year. When interest rate on bonds get high enough, they are competition for money that is now in the stock market. So the people who worry about this decided to sell some of their stocks.
  1. Forced Selling. Perhaps the main reason for the stock market dive has been caused by hedge funds and others who invested in something called the VelocityShares Daily Inverse VIX Short Term Exchange Traded Note (and other securities like it). It is a security that bets on the volatility of the stock market. This is a highly leveraged security that is great when there is no volatility in the market.

Unfortunately, the spike in volatility in the market has caused some of these Exchange Traded Notes (ETNs) to nosedive by as much as 80%. Because they are leveraged, the hedge funds and other investors were losing a fortune and had to cover their margin calls. How do they raise money to cover the margin? They sell stocks that they own. This is what’s known as forced selling and it is happening in spades.

Are We in A Bear Market?

Does this indicate the start of a bear market? I don’t think so because the earnings that companies just reported were pretty good. Nothing has changed with the economy in the last week, just the price of stocks.

We might be in for a few more days of this until the forced selling abates. I do not believe this is the time to do any wholesale selling because the economy is still good. The tax cuts haven’t even started to kick in yet.

The advice from us is to sit tight, stay calm and if you have the cash be ready to gobble up some good stocks that continue to be forced lower.

As always, we are here for you, so if you have any questions, do not be afraid to contact us.

You can reach us at 760-692-5190 or Steve@WWMFinancial.com