Nightmare on Wall Street or a Keith Richards Stock Market? When you receive your October investment statement you may be in for a shock. The S&P 500 Index was scared into a 10% fall this month after nine years of dreamy gains. The question is whether most investments will wake up from this nightmare soon or predictions will finally come true that this bull market run is over. In 1973, Rolling Stones guitarist Keith Richards was #1 on the list of rock stars “most likely to die” from New Music Express magazine. Keith has had many brushes with death including bouts with heroin addiction and a cracked skull from a tree fall. And yet, forty-five years later, Keith remains among the living and on another Rolling Stones worldwide tour.
Last week ending October 29th, every investment sector was spooked by accelerated tariff talk, corporate earnings, and interest rate hikes. The S&P 500 Index was down 4% for the week. The biggest dippers included Energy (-7%), Industrials and Financials (-5%), Communications and Healthcare (-4%), and Tech (-3%). For the year, Basic Materials are down 15%, Financials are off 8%, Industrials are lower by 7%. Even though the leading FANG stocks (Facebook, Amazon, Netflix, and Google) were pummeled last week, the tech sector is still ahead by 9% so far in 2018. Real estate has lost 2% this year and gold is down from $1,291 to $1,234 per ounce. If you want to hide out for a while, we can find you a six-month CD at 2.35% or a twelve-month CD at 3.05%. With this month’s apprehension all around us…the third quarter showed the U.S. economy grew at 3.5%, GDP growth remained robust and inventories surged $113 billion.[i]
Required Minimum Distributions (RMDs) are due from IRA and Inherited IRA account holders each year before December 31st. If you miss the deadline, the IRS penalty is 50%! You will have many alerts and reminders coming your way shortly. If you want to take your money sooner than later…please get in touch.
For most investors, this scary time might be akin to a haunted house visit. You know what to expect but you can still be frightened around the next corner. If the fear is too great, don’t go in the door. If you don’t mind the excitement, enjoy the scare. Last week, we made a bundle of purchases of what we consider to be very good investments that were “on sale” during this latest downturn. Halloween is a good time to remember Warren Buffett’s mantra, “When investors are greedy be afraid; when investors are afraid be greedy.”
Trick or Treat…and best wishes for a profitable fourth quarter.
[i] J.P. Morgan Asset Management 10-29-18