S&P 500 Continues Its Consecutive Losing Streak – – Pre-Election Jitters or Ominous Sign of Things to Come?
- On November 7, 2016
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By Phil Ciano
December of 1980 was a memorable month for a lot of reasons. I became a teenager; my favorite rock band of all time (Led Zeppelin) broke up; John Lennon was shot and killed, and my favorite movie of all time (Raging Bull) was released. So, what does December, 1980 have to with my investor Blog this month?
This past Friday, November 4th, marked the ninth consecutive day that that S&P 500 declined. The last time that happened was in December of 1980. The fact that it took 36 years to tie the S&P 500’s longest losing streak is remarkable in and of itself. However, this consecutive decline is more worrisome than most. Granted, over the past nine days of losses, the S&P 500 is, overall, only down a measly 3%. This is a far cry from the October, 2008 decline of eight consecutive days, which resulted in a total of 23% in losses! Here, however, investors are pointing to one reason for the drop: Donald Trump. As the United States Presidential race and Senate races tighten across the Board, a Trump presidency seems to hint of darker things to come should the self-proclaimed billionaire “dealmaker” actually pull this off on November 8th.
Fundamentally, there is a lot for investors to be anxious about. According to leading economist, Andrew Smithers, “U.S. stocks are now about 80% overvalued.” Smithers notes that the last time in history stocks were this risky was 1929 and 1999. Those resulted in the Great Depression and the tech bubble burst, wherein stocks fell by almost 90% and 50%, respectively.
More gloom and doom is predicted by James Dale Davidson – – the renowned economist who many claim predicted the tech bubble collapse of 1999, and the Great Recession of 2007-2008. Davidson is predicting a 50% market correction in the immediate aftermath of tomorrow’s election.
According to financial author, John Whitefoot, “The Federal Reserve’s easy monetary policy that was supposed to kick-start the economy has left the U.S. stock market wildly overvalued. . . . The U.S. Stock market has been living on borrowed time. And it’s time for payback. . . .” Whether you’re an eternal and optimistic “long” investor or a cynical “short” opportunist, the next 3-6 months will inevitably and significantly impact your stock/bond/cash portfolio. Your financial advisor should have already been preparing you for a rocky Q4, pre-election decline and your well-balanced portfolio should be appropriately structured to weather any storms that are on the horizon. If those storms fail to materialize, you are no worse off for the wear. If you are not adequately prepared, however, catastrophic losses are not out of the question.
You should continue to communicate openly with your financial advisor regarding your goals, objectives and risk tolerance. For questions concerning negligent, fraudulent or other misconduct by your broker or irregularities in your investment accounts, contact Phil Ciano or Andy Goldwasser at 216-658-9900.