In today\u2019s Steady Investor, we look at what is\ngoing on in the markets and our key takeaways and questions for investors to\nconsider, such as:<\/p>\n\n\n\n
Equity Market\nVolatility Persists, and is Likely to Continue \u2013 <\/strong>During times like these,\nsometimes the best course of action is to watch as little news as possible and completely\nrefrain from checking your portfolio value, in our view. The goal of taking these\ntwo actions is simple: remove emotion\nfrom the decision-making process and stay focused on the long term<\/em>. The\nlast few trading days offer a case in point: coming off a horrendous final week\nof February, the S&P 500 took another nosedive (-2.8%) on Tuesday even as\nthe Federal Reserve cut interest rates by half a percentage point. The\nfollowing day, however, the S&P 500 rallied by +4.22%, which many news\noutlets credited to Joe Biden\u2019s surge in Super Tuesday voting.1<\/sup> In\nour view, there is no real way to attribute the S&P 500\u2019s losses or gains\nto single events or data points. During market corrections, the S&P 500\u2019s\nchanges are impossible to predict \u2013 what happens one day often has no bearing\non what happens the next. Investors who try to time their exits and entries in\nthe market during a correction are almost sure to make big mistakes, in our\nview. Often times, the best days in the market follow the worst days, so\ngetting in-and-out leaves wide open the possibility of selling into a rally or\nbuying right before another downdraft. With equity market volatility likely to\npersist, we think it\u2019s better to keep a cool head and ignore the noise.<\/p>\n\n\n\n ______________________________________________________________________________<\/p>\n\n\n\n Don\u2019t Let Fear Drive Your Investments!<\/a><\/strong><\/p>\n\n\n\n In any given year, a steady stream of troubling news, like\nthe coronavirus, can make it seem like the stock market is doomed. But\nexamining history shows that the stock market has thicker skin than most\ninvestors do. Our Guide, \u201cFeeling Bearish? This is How Stocks Deal with Uncertainty\u201d\n<\/em>looks at how the market reacted to historical events. <\/p>\n\n\n\n If you have $500,000 or more to invest, click on the link\nbelow to get your copy today and see just how resilient the market can be.<\/p>\n\n\n\n Feeling Bearish? This is How Stocks Deal with Uncertainty<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n ______________________________________________________________________________<\/p>\n\n\n\n Rate Cuts Probably Less Effective than Fiscal Spending and Time \u2013 <\/strong>We believe most economic weakness that results from the coronavirus will come from a supply shock \u2013 production delays, supply chain issues, trade bottlenecks. These are all issues we think can be amended quickly, once the crisis abates and the affected countries resume business as usual. That\u2019s also why we think interest rate cuts are far less effective than fiscal stimulus and, simply put, time<\/em>. A 0.5% rate cut won\u2019t help to restart a factory or stimulate global trade. But a few months of time can, in our view. Fiscal stimulus can also be effective during crises like these, for two reasons: it sends a signal to markets that governments are willing to spend to address the crisis, and it helps to make up for the shortfall in consumer spending that is likely to occur as people stay home and change their normal habits. Though many news outlets pointed to Joe Biden\u2019s Super Tuesday wins as fuel for Wednesday\u2019s market rally, a different take might assert that stocks were responding to the $8 billion spending bill that quietly passed in the House.3<\/sup> <\/p>\n\n\n\n The Federal Reserve\nChanges Rules for Big Banks (In a Good Way) \u2013 <\/strong>In a much-anticipated\nrevision of the 2010 Dodd-Frank rules, the Federal Reserve voted almost\nunanimously to restructure the \u2018capital requirement\u2019 rules for the biggest US\nbanks, like JP Morgan, Citigroup, and Bank of America. There was a good\nargument, in our view, that the Dodd-Frank set of bank regulations had noble\nintentions but flawed structure and enforcement. Lawmakers struggled for years\nto clarify the complex set of rules, while banks operated with a high degree of\nuncertainty over what the playing field would ultimately look like. This most\nrecent Fed overhaul simplifies the \u201cpost-crisis capital framework for banks,\u201d with\nnew rules that essentially streamline stress tests and reduce the number of\ncapital requirements down to 8 (from 13).4<\/sup> <\/p>\n\n\n\n Remember Economic\nFundamentals in the Backdrop \u2013 <\/strong>Before the coronavirus absorbed global\nheadlines, the US economy was looking steady and reasonably strong. Housing and\nconstruction spending were trending nicely; hiring remained robust and wages\nwere ticking higher; the stock market was hitting new all-time highs; the US\nand China had made positive moves towards easing the trade war; and consumer\nspending was reflecting the strong labor market. In all, the US economy was\npositioned to grow in the middling but still nicely positive 2.5% range, with\ncorporate earnings poised to make a comeback off a weak 2019.5<\/sup> The\ncoronavirus will almost certainly require downward adjustments to earnings and\ngrowth forecasts, but we believe the conditions that existed before the virus\noutbreak can exist after it, too. <\/p>\n\n\n\n While the coronavirus has most investors worrying, it is\nimportant to remember that the market has dealt with similar events in the\npast. So, before you \u201cjump ship” on stocks, take a moment and to look at\nhistory for perspective. <\/p>\n\n\n\n In any given year, a steady stream of troubling news can\nmake it seem like the stock market is doomed. But examining history shows that\nthe stock market has thicker skin than most investors do. Our guide, \u201cFeeling\nBearish? This is How Stocks Deal with Uncertainty\u201d6<\/sup> <\/em>looks at how\nthe market reacted to historical events. <\/p>\n\n\n\n If you have $500,000 or more to invest, click on the link\nbelow to get your copy today and see just how resilient the market can be.<\/p>\n","protected":false},"excerpt":{"rendered":" The importance of a long-term focus and remembering that fundamentals are still reasonably strong<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-8545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8545","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\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8545"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8545\/revisions"}],"predecessor-version":[{"id":10628,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8545\/revisions\/10628"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8545"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8545"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8545"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}