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.
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.
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.
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