Calls for “TINA” Rejoining the Goldilocks Party are Media Spin
CIO Chris Perras talks about what “TINA” has to do with the media and stock market returns on the 7/5/2019 edition of Stock Talk!
Chris Perras: Hi, I’m Chris Perras, Chief Investment Officer at Oak Harvest Financial Group, and welcome to the July 5th edition of our weekly Stock Talk Podcast: Keeping You Connected To Your Money. This week episode is entitled, Calls For TINA Rejoining The Goldilocks Party Are Financial Press Spin. As of today, the S&P 500 sits at 2,975. With the Federal Reserve expressing a willingness and desire to ease financial conditions first, on January 4th, and second, on June 3rd, the S&P 500 has rebounded to an all-time high of 2,975.
Please review our second half outlook first released three weeks ago. It can be found on our website by googling Oak Harvest’s second half of 2019 outlook. So far so good on our outlook as the normal summer rally has begun pretty much on cue. This week’s rally, excuse was one, the positive effects of the recent US trade truce with China, and two, all the financial pundits talking about the Federal Reserve meeting coming up in July where they had cut by 50 basis points. This, in turn, led the financial press to return to their often quoted term of TINA, T-I-N-A, standing for there is no alternative, meaning that with long-term interest rates so low, money was flowing into stocks.
While this phrase is certainly catchy and memorable, the reality of the situation is blatantly wrong. The stock market has rallied impressively year-to-date with the S&P 500 regaining all of its losses from last September 2018’s highs of around 2,950. The US ten-year Treasury yield has rallied from over 3% to 2% in the same time span. Year-to-date, almost $230 billion, I’ll repeat that, $230 billion has moved into bond funds while over $150 billion, yes, $150 billion has left equity funds year-to-date. In fact, investors sold over $15 billion in equities last week alone.
Clearly, the data says there are alternatives to stocks. Clearly, the data says the new all-time high in the stock market is not, and I repeat, is not being driven by mass flows into equities in search of higher returns than bonds. While TINA is that catchy and repetitive tagline that the financial press continues to tout, it is not reality.
On a final note, returning to our weekly segment of the podcast, “I don’t want to invest now!” segment, this week’s antidote was actually targeted, not at the stock market overall, but rather at a single stock. We received a call from a client a few weeks back who said, they’d read an article recently on a specific stock. They didn’t like what they read and they wanted us to sell that stock out of their portfolio.
We did the best we could to explain to this investor that you hire Oak Harvest Financial Group to be your financial advisor. We are experts in financial planning and investment management. We help you lay out your financial plan, choose the tools that can best meet your objectives, and then we implement the plan as a fiduciary. We are in the advising business, not the facilitating business. So what do we do? We also believe that it’s your money and if you desire us to use alternative tools to meet your goals, we will do our best by other means. However, we continue to emphasize that investors should try to remain as emotionally distant from their financial decisions as possible.
For example, recently the financial press has made big waves about congressional pushes to regulate, reign in, or split up the big tech companies, such as Facebook, Amazon, and Google. Some investors read those articles and say, “I don’t want to invest here, these stocks aren’t for me. I’ll look elsewhere to put my money.” The investment team at Oak Harvest is looking everywhere for undervalued growth in income opportunities caused by others panics. We have been net buyers of these stocks for growth investors the last six months as others have panicked. We have found them undervalued when these articles surface.
I want to remind listeners that from the time these exact types of talks started around Microsoft in the 1990s, that stock only gained, and I say only sarcastically, 100% in the next three years, given the strength in its overall core business. In closing, if you find this content helpful, please forward it to friends or have them give us a call at 281-822-1350. Go browse our new website and new content at oakharvestfg.com. You shared your vision for your money with us during our meetings and we are here for you. Our main job at Oak Harvest is to have you retire only once in your life. Many blessings. This is Chris Perras.
Speaker 2: The preceding content expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, statistics, and sources are not guaranteed. Content, ideas, and strategies discussed may not be right for your personal situation and should not be considered as personalized investment, tax, or legal advice, or an offer or solicitation to buy or sell securities. Investing involves the risk of loss and past performance does not guarantee future results.
CFA®, CLU®, ChFC®
Chief Investment Officer, Financial Advisor
Chris is a seasoned investment professional with over 25 years of experience working with some of the most successful money management firms in the world. Chris has made it a point in his career to adapt as the market landscape changes, seeking to utilize the appropriate investment strategy for a given market environment. His transition from managing billions of dollars at the institutional level to helping individuals and families retire is guided by a desire to see first-hand the impact he is making in the lives of clients at Oak Harvest.