A Really Cool (but scary) Statistic
Dear Clients & Friends,
This weekend’s reading will be brief because several of our staff and I are attending a conference in San Diego. However, I thought I’d share one intriguing statistic which is both exciting and alarming.
Some quick background context- for several months, MOR Wealth Management has been predicting a 6%-16% rise in the equity markets, followed by a meaningful market correction commensurate with a recession which we believe will begin in late 2018-early 2019. Since we first made this prediction in late June, as of today, the S&P 500 has gained 4.8%; so we are on track so far.
Here is the intriguing statistic: In 2017 through the end of September, including dividends, the S&P 500 has posted a gain in every single month. This has only occurred one other time in history (1995), and it’s on track to break this historic record with a 10th straight positive month, showing gains so far in October of 1.2%
To those who had previously asked if, given our longer term concern, we should slam on the brakes earlier in the year, this is why we had not done so. And while we have been making changes since June in anticipation of our longer term forecast, we expect that the market will rise at least another 5%-10% prior a meaningful inflection.
This static I share with you is exciting, and we can all celebrate the performance of our investment portfolios this year, as well as the last several years. However, I am reminded of two quotes seemingly apropos. 1) Franklin D Roosevelt once said, “We have nothing to fear but fear itself.” In this context, however, I think the opposite is applicable. I fear that a complete lack of fear has introduced complacency. History has shown many times that complacency is often followed by a market crash that “We should have seen coming.”
The second quote is the Warren Buffett comment we’ve recently been using regularly, “Be fearful when others are greedy.” Folks, lots of people are getting greedy now. Avoid the herd. This is not the time to add more liquor to the punch bowl. It is midnight, and the party has been raging for 10 years. We have not yet, and have no plans to run away scared, but now is the time to remove the punch bowl and replace it with water and coffee. The party is indeed still happening! We’ve enjoyed recent gains and we believe there is more to come. But its time to start sobering up and get ready to come home.
Next week we will publish our month risk update with more context. For now, we wish all of our clients, our friends, and our readers a lovely weekend.
Matthew Ramer, AIF® Principal, Financial Advisor MOR Wealth Management, LLC
1801 Market Street, Suite 2435 Philadelphia, PA 19103 P: 267.930-8301 | c: 215-694-4784 | f: 267.284.4847 |
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Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results.
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