September Market Update

Written by Alex Shen, CFA & Andy Pratt on .

The S&P 500 lost 11% in six trading days during August’s abrupt selloff.  Though it recouped some of the losses early in September, negative economic and political news kept coming pushing equities down further.  All Size and Style segments of the market were negative during September as were all economic sectors with the exception of Consumer Staples and Utilities.

September 2015 SS

September 2015 Sector

The question in investors’ minds is whether we are at the end of a correction or the beginning of an economic downturn.

The Fed's Decision: Interest Rate Changes and Stock Returns

Written by Alex Shen, CFA & Andy Pratt on .

2:00 PM on September 17th has been circled on investors' calendars for months. That is the date and time the Federal Reserve releases the minutes from its September meeting announcing whether interest rates will be kept at the current, near 0 level or begin the first rate hike as the US economy continues to get back on its feet.

Predictions for what a rate hike means for stocks are in vogue with the general belief that rising interest rates are bad for stocks in the short term but more nuanced takes predict that there is really not much to worry about.

We decided to check on how changing interest rates and stock prices interact to gain an understanding of what to expect when the Fed inevitably does begin to raise interest rates.

Jeremy Siegel: How stocks could rise even after a rate hike

Written by Andy Pratt on .

Renowned stock market expert Jeremy Siegel went on CNBC's Squawk Box to discuss the Federal Reserve's looming rate hike decision.  Interestingly, he sees the possibillity that the Fed increases rates and stocks rally as a result of dovish language and lower "Dot Plot" expectations.


Think You can Time the Market?

Written by Andy Pratt on .

Economic research has time and again shown that it is really hard, if not impossible, to consistently beat the market by strategically going cash.  As an investment advisor that specialzes in equities, we know this first hand.

That is why we will always stay fully invested.

If you're not convinced, Quartz created a game for you to try timing the market yourself.  See how often you can beat the market.

A Message from our President: Mid-August Correction

Written by Lowell D Pratt Jr., CFA on .

On average over time, market corrections occur roughly once every two to three years, making the extended period until last week without one unusual. Three things are important to remember during stock market panics. First, these are completely ordinary market events that serve the usual purpose of chasing less committed equity investors to the sidelines. Second, in time stocks will completely recover their lost ground, so anticipating that recovery should be our focus now. Which leads to the final important point, and that is the fact that market panics create exploitable opportunities.

The most obvious opportunity is to rebalance asset mixes back to target allocations, which means selling some stable assets and plowing those funds into temporarily depressed stocks. Another similar opportunity is to rebalance equities toward the ones with best recovery potential. The types of stocks that selloff the most during a panic are the same ones that rebound the most vigorously during recoveries. This creates a relatively brief but highly attractive trading opportunity. There are other more aggressive responses as well, but these first two opportunities should be exploited first.

Our ambition should be to come out well ahead when this stock market panic/recovery cycle completes its course.

Lowell D. Pratt Jr., CFA

Lowell Sig Clear