{"id":4098,"date":"2017-03-03T16:31:39","date_gmt":"2017-03-03T21:31:39","guid":{"rendered":"http:\/\/162.223.13.186\/~zacksim\/?p=4098"},"modified":"2022-02-26T13:20:44","modified_gmt":"2022-02-26T13:20:44","slug":"stock-market-investors-biggest-worries-today","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/stock-market-investors-biggest-worries-today\/","title":{"rendered":"Stock Market Investors\u2019 Biggest Worries Today"},"content":{"rendered":"<p>By March of this year, this will be the 3<sup>rd<\/sup> longest U.S. economic expansion since 1900, and the bull market is now the 2<sup>nd<\/sup> longest in history. Thinking about these two facts together, it naturally has many investors wondering: is the end near? Something has to give, right?<\/p>\n<p>Well\u2026yes and no. The nature of economic cycles and bull markets is that historically, they always come to an end at some point. Everyone knows what happens next \u2013 recessions, job losses, and bear markets agonize the economy, but then an economic recovery and expansion arrive and the process repeats itself! It\u2019s the circle of financial life, and I doubt it will ever change. That\u2019s why the four most dangerous words in investing are: \u201cIt\u2019s different this time.\u201d<\/p>\n<p>For many investors out there, however, it <em>does feel very different this time<\/em>. The political climate in this country and in many countries across Europe is changing fast, and policy shakeups feel inevitable. If anything, this upsurge of political and social unrest has caused a higher degree of <em>uncertainty <\/em>amongst investors and corporations, and markets loathe uncertainty.<\/p>\n<p><strong>Here are the three biggest worries I see for investors today:<\/strong><\/p>\n<ul>\n<li><strong>The Economic Expansion and Bull Market are Long in the Tooth \u2013 <\/strong>as mentioned before, this is the 3<sup>rd<\/sup> longest U.S. economic expansion since 1900, and the 2<sup>nd<\/sup> longest bull market ever. I\u2019ve written many times before that bull markets do not necessarily have to die of old age, and neither do economic expansions. But, it can reasonably be deduced that there\u2019s a reason expansions and bull markets don\u2019t go on forever. Assets eventually get mispriced and growth cycles get stunted by bubbles or misallocations of capital. It\u2019s only a matter of time.<\/li>\n<li><strong>Geopolitical Instability \u2013 <\/strong>all bets appear to be off when it comes to President Trump\u2019s vision of America\u2019s place within the global political and economic sphere. This may embolden China and\/or Russia to make drastic bets, which can have far-reaching economic and market consequences. It\u2019s difficult to know exactly what those may be, but it feels as though now more than ever the political chess match has intensified greatly.<\/li>\n<li><strong>Euphoria \u2013 <\/strong>with fiscal stimulus seemingly on the way as well as tax cuts and promised deregulation, investors and corporations may get a little too excited about growth prospects ahead. When that happens, investors tend to take more risks, which bids up the prices of assets well into overvalued territory. Before everyone realizes that everything is overpriced, the bear market will likely be in full force.<\/li>\n<\/ul>\n<p>You most likely noticed that there was no mention of policy missteps from the new administration here in the U.S. That\u2019s because it is largely our belief that the policy proposals that involve taxes, deregulations, and fiscal spending are not likely to throw the economic expansion off course. They may be inflationary in many respects, but we do not believe to the point that causes a crisis. The Federal Reserve is in a position to raise interest rates substantially to combat inflation, and such moves will likely be effective if taken. The new administration may be able to stoke growth in the near term (next year or two), the question is will stocks get frothy if there\u2019s too much excitement and <em>expectation<\/em> built around that growth. That\u2019s the critical factor investors should remain focused on.<\/p>\n<p><strong>Bottom Line for Investors<\/strong><\/p>\n<p>There are many uncertainties and worries that exist in the marketplace today. But then again, aren\u2019t there always uncertainties and worries? Investors must remember to keep focus on the fundamentals that actually move markets: broad-based economic growth, corporate earnings growth, an upward sloping yield curve, and high and rising leading economic indicators. All of those signals point to more bull market ahead, for now. But investors need to keep a close eye on how policies take shape and how the world responds to a new political agenda. It\u2019s a time for cautious optimism.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By March of this year, this will be the 3rd longest U.S. economic expansion since 1900, and the bull market [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4122,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59,60,63,71],"tags":[],"class_list":["post-4098","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-professionals","category-institutional-investors","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/4098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=4098"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/4098\/revisions"}],"predecessor-version":[{"id":11074,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/4098\/revisions\/11074"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=4098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=4098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=4098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}