12/21/2018 1:26:38 PM
Jerome Powell – raises interest rates again
· Powell could easily be blamed for this entire market decline starting in October
· He’s been an aggressive Hawk with interest rates
· Conspiracy theorists would say that by causing trouble for stocks, Chairman Powell is selling treasury bonds, as investors flee stocks and buy bonds
· Let’s just say Chairman Powell is not on my Christmas list
Look at the S&P 500 index 20-year monthly chart
· The red line is the long-term trend line
· The blue lines create a 10% plus or minus around the trend line
· Note the red boxes – they mark the times that the S&P 500 index dropped below the lower band (i.e., -10% below the long-term trend line).
· Last occurrence was 2012, although we touched the bottom envelope in 2010, 2015 & 2016
What to do?
· We have been trimming our equity positions, reducing our stock % allocation in our model portfolios.
· If you are concerned, call our office 800-578-3181
· You and your advisor can discuss your options, which are:
· Dial down your equity %
· Dial up your equity % (stocks are low and on sale)
· Stay the course, do nothing