Stocks climb a wall of worry.
What does this mean?
Today, we talk about:
- The news always seems bad
- Recessions, trade wars and now impeachment dominate the headlines.
- But the stock market? What has it done.
We’ll talk about it on this episode of Monday Morning Money.
Stocks climb a wall of worry.
What does this mean? Think about all the stuff which has circulated in the headlines over the past year.
A Looming Recession
We continue to deal with the threat of a recession. A major economic slow down can lead to higher unemployment. It can also impact businesses big and small. In some cases, a recession can mean a bear market.
The talk of a recession tends to darken the mood though, and people’s attitudes tend to sour on things like stocks.
We are still in the midst of a trade war with China. Something many experts feel could contribute to our economic woes. Both countries are taxing goods imported from the other. This serves to drive prices higher for the consumer.
Officials from both countries continue to talk. Unfortunately, nothing has happened, yet.
And now we can add the possibility of impeachment to the list of big things affecting the mindset of the American public. Regardless of where you stand on this issue, it casts a dark cloud over the future.
What the impact will be? Nobody really knows. Since the 1920’s this has only happened twice, with presidents Nixon and Clinton. Nixon’s problems started in late 1972. The stock market in 1973 and 74 declined nearly 50%.
Clinton’s problems happened in 1997 and 1998. In both years, the stock market was up over 20%.
So we don’t have a lot of data to help guide us on what to expect.
With all the uncertainty, the dismal news cycle, and overwhelming pessimism, what has the stock market done?
Last Monday – the 28th – the S&P 500 set a new all-time high.
At that time the popular large-cap index was up over 23% on a total return basis for the year.
On the same day, The Dow Jones Industrial Average closed to within less than 1% of it’s all-time high.
This is what it means when people say, “Stocks climb a wall of worry.” The doom and gloom surrounds us. In fact, it is hard to imagine there is anything good happening in the world. But yet, the stock market just quietly marches higher.
Beneath the noise are great businesses. Companies who find ways to improve profits and deliver value to their shareholders. And sometimes it leads to a pleasant surprise waiting for us when the dust settles.
Monday Morning Money is a podcast talking about current events which impact your bottom line.
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About the Author
Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors He typically works with people who are planning for retirement. Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio. Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.