Positive Data; Keeping Emotions in Check
Welcome to the Oak Harvest Market update and recap for 8/23/2021!
Domestic equity markets slipped during option expiration last week amid concerns over the Delta variant and mixed economic data. Intra-week the S&P 500 lost just under -3% into the Thursday morning pre-market session. Our view continues to be that any correction or pull-backs will be limited to the 3~4% range during this season. On the week, the S&P 500 lost only 0.6% after a solid finish on Thursday and Friday. Europe and Asia posted deeper declines in the 2%-to-4% range given their cyclical biases.
Over in the “interesting” world of the financial media, many headline stories and strategists led last week with the headline: “S&P 500 gains 100% the fastest since the Great Depression.” That’s true, but oddly enough most outlets seemed to strongly imply that this is a negative thing. Chris addressed this in our Stock Talk podcast last week, so check it out for our thoughts on the topic.
As for this week, the main event will be the Jackson Hole Symposium (Aug. 26-28), now held virtually amid the rise in Delta cases. Fed Chair Powell’s keynote speech on “The Economic Outlook” is set for 10 am on Friday. Trading markets will be waiting for any hints about the timing of tapering or whether the Fed has become less sanguine about the economic outlook owing to the surging Delta variant.
Bloomberg is reporting that Treasury Secretary Yellen will back Jerome Powell for second term as Fed Chair policy. Powell has been the “investor’s best friend” during his term, so this move could reduce uncertainty surrounding monetary policy.
The FDA is set to grant full approval for Pfizer’s COVID vaccine, which adds to other incremental data that supports an improving picture around the general COVID situation, including the fact that the 7-day delta for US COVID cases has turned negative.
Generally, Oak Harvest upholds our consistent, positive view for the remainder of the year, amidst the fearful “seasonal decline,” “taper tantrum,” and other fearful clamoring from many. Our approach hasn’t changed (buy good companies within a diversified portfolio, within an overall investment strategy, within the context of a holistic financial plan aimed squarely at your goals, risk tolerance, and situation), and James’ usual reminder applies: the vast majority of “news” is not only just noise, but noise that is designed to get you to emotional, and then make bad decisions based on those emotions.
Bull markets trend and grind with strength begetting strength, and every minor pull-back being bought. Sectors take “turns at the top,” with leadership shifting around from sector to sector over time. Market timing remains essentially impossible, and any of those bearish strategists out there who have been incorrectly calling “the top” for…over 12 months now!…want to yet again call for “the top” are engaging in a simple exercise: hoping to get lucky (but more likely to just be wrong again).
Stock Talk Podcast (Weekly News and Insight from Oak Harvest):
https://oakharvestfg.com/stock-talk/burying-the-lede-fear-sells/
The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):
https://oakharvestfg.com/investor-mindset/
Interesting Readings:
https://finance.yahoo.com/news/tumbles-stock-market-keep-coming-123942659.html?guccounter=1
Weekly market updates contain general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely. Oak Harvest provides links to content produced by other websites that OHFG does not control, and Oak Harvest does not necessarily approve or endorse such content and does not guarantee its accuracy.
Nothing in this content constitutes personalized investment advice. All charts, indicators, or graphs included or referenced in this content have limitations, and no such material is able, in and of itself, to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you, and views and opinions expressed may change without notice. Strategies and ideas discussed will not apply to all client accounts or portfolios.
Nothing in this content constitutes a recommendation, or an offer or solicitation to buy or sell securities. Oak Harvest makes no assurance as to the accuracy of any forecast or projection made. Not all past forecasts or projections were, nor future forecasts and projections may be, as accurate as any forecasts discussed. Indexes like the S&P 500 are not available for direct investment and your results may differ. Past performance is not indicative of future results. Investing involves the risk of loss.
