Emotional Investing

February 24, 2020

Market Update, 2020-02-14: Equity markets fell late last week. The S&P 500 was down 1.3% as gold jumped and energy bounced. A solid earnings report from Deere on Friday caused a bounce in value oriented cyclical stocks.  Bond yields fell last week with the 30-year Treasury reaching a new all-time low yield. This may have been an emotional investing response.

Politics

Bernie Sanders’ is winning early Democratic polling with a convincing win in the Nevada caucuses on the weekend. The next big tests are Saturday’s South Carolina primary. There, Biden still leads in the polls. And three days later on Super Tuesday when delegates in 14 states are up for grabs.

Emotional investing

We want to thank our special guest speaker Weston Wellington from Dimensional Fund Advisors. emotional investingWellington spent last Friday morning educating a packed room full of OHFG clients and guests. The topic was the history of “emotional investing” and investor psychology over the long term. Also, Dimensional Funds penned a piece on long-term investing and stock market cycles: A Tale of Two Decades, which was the basis for our podcast last week.

Covid and emotional investing

As for this morning, there is little letup in COVID-19 news over the weekend. China cases look to be peaking, and the rate of change slowing, which is clearly good news. However, in northern Italy, it appears more cases and deaths developed though migrant workers. As a result, many public events were canceled in Venice and Milan.  Italy now has around 152 cases — the fourth highest number of cases outside of China, Japan and South Korea.

As a result, the coronavirus news continued to dominate the headlines.  As of this Monday morning, there are now a total of 2,625 deaths, 79,434 confirmed cases, and 23,944 recoveries.

Therefore, these concerns led to a large selloff this Monday morning in global financial markets, possibly an emotional investing response. Japan is closed today. The rest of Asia was down. The China index dropped 0.4%, and the Hang Seng’s 1.8% drop was modest. The South Korean markets dropped 3.9%. Its President yesterday warned that the next few days will be “critical” for Korea. The outbreak of the virus there has been largely confined to a small, fringe religious group and the healthcare workers treating them.

The USD index is a touch stronger, with nearly every major down against the greenback.

Resources

  • The best website I have found for following Covid statistics for yourself is here.

 

Weekly market updates contain general information and expresses views of Oak Harvest Investment Services. Data, Articles, and information cited are believed to be reliable at the time of creation, but is not guaranteed. Content should not be regarded as personalized investment advice. Views and opinions expressed may change without notice. They do not constitute a recommendation, or an offer or solicitation to buy or sell securities. In addition, Oak Harvest makes no assurance as to the accuracy of any forecast made. Past performance is not indicative of future results. Investing involves the risk of loss.