top of page

Market Down / Economy Sound | Crouch Connection, January 2019

MARKET DOWN / ECONOMY SOUND

Santa’s sleigh is usually pulled by reindeer. This year, it looks as if it were pulled by a team of bears. With the Dow Jones Industrial Average down 8.7% this past month, this was the worst December since 1931.

As Barron’s said this week, “While government shutdowns and cabinet resignations make for good headlines, there is only one thing that gets the market to slide like that: recession fears, in this case exacerbated by a Federal Reserve that seems to acknowledge that possibility.” So, is a recession in our immediate future?

“THE ONLY THING WE HAVE TO FEAR IS FEAR ITSELF”

In her December 14 “Economic Perspective”, TD Bank Chief Economist Beata Caranci borrowed the quote from President Franklin Roosevelt’s inaugural address to make an important point:

Even though “financial and economic indicators have yet to breach levels that would signal an impending recession…the only thing we have to fear is fear itself.” She goes on… traditional market indicators, both financial and economic, do not indicate any danger of an imminent recession, “However, beliefs and sentiment create outcomes. Business investment intentions become more cautious, and we risk having a prophesy be fulfilled by behavior adjustments, particularly if households respond in a similar fashion.”

One of my favorite economic prognosticators is Fred Smith, the colorful CEO of FedEX Corporation. In his conference call, also on December 14, he said:

“FedEx is experiencing strong growth in the U. S. where the economy remains solid. However, our international business, especially in Europe weakened significantly since we last talked to you during our earnings call in September. In addition, China’s economy has weakened due in part to trade disputes.”

FedEx CFO Raj Subramaniam continues:

“In the U. S., growth remains solid driven by robust consumer spending and favorable conditions in the industrial sector. The secular slowdown in the Chinese economy has been exacerbated by trade tensions. Spillover effects from these tensions and the fading tech cycle have negatively impacted growth throughout Asia.”

Bottom line…we believe the U. S. economy remains solid.

FED WRECK OR SELF-INDUCED SLOWDOWN

Two things, in our view, could turn a perfectly healthy economy into a recession:

  1. A tone-deaf Federal Reserve that continues to ignore the deafening signals from the market – signals which indicate that the interest rate hikes are too much for an economy still fragile from the Great Recession and its aftershocks. Hopefully the four new voting members who take their seats at the Federal Reserve after the first of the year will swing the Fed back to a more accommodative and supportive stance.

  2. A negative media finally convinces the American public to quit spending their generally healthy incomes and save for a rainy day. In general, that is probably good advice, but when all of us become fearful at once and slow our spending collectively, the economy does slow down. So far, we haven’t seen signs of that.

That said, negative expectations have the potential to become self-fulfilling. For now, I believe the only thing we have to fear is fear itself (and the Fed).

WHAT DOES A WISE INVESTOR DO?

According to CNBC.com, the latest CNBC Millionaire Survey shows that even as volatility spiked in the period since September, wealthy Americans are not making major changes to their portfolios. Their portfolios look similar to the classic 60-40 investment plan (60% equities/40% bonds). Reporter Eric Rosenbaum observes, we think correctly, that

“Investors who have constructed a diversified investment plan based on their financial situation and risk tolerance are not going to “run for cover” when the market doesn’t go in their direction.”

Although there are times to “lean in” or “lean away” from the market, making extreme moves in response to market volatility is almost always the wrong thing to do. We believe that staying invested will pay off, although investors should expect more volatility. Growth may be slowing, but we don’t expect a recession, particularly one as severe as the market seems to be expecting.

WRAP UP

We will close with the well-worn Warren Buffett quote:

“We simply attempt to be fearful when others are greedy and to be greedy when others are fearful.”

And from “Barron’s” this week:

“The third year of a presidential cycle has been positive for the Dow in all but one instance in the past eight decades: 1939, at the outset of WWII, when it dropped 2. 9%”

As we always remind you, please call if you need any reassurance that your portfolio is positioned to meet your financial needs. We always enjoy your calls.

Sincerely,

Dave Crouch Kim Blackburn Kay O’Connell

Registered Principal Branch Operations Manager Research Assistant

Financial Advisor Financial Advisor

Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Holding investments for the long term does not insure a profitable outcome. No investment strategy can guarantee success. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Tags:

Featured Posts
Recent Posts
Archive
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

Visit

3326 Aspen Grove Drive

Suite 602

Franklin, TN  37067

Call

T: 615-778-9842

© 2019

Aspen Grove
Asset Management

Important Disclaimers

AGP Franklin, LLC ("AGP Franklin") is a Registered Investment Advisor ("RIA"), located in the State of Tennessee. AGP Franklin provides investment advisory and related services for clients nationally. AGP Franklin will maintain all applicable registration and licenses as required by the various states in which AGP Franklin conducts business, as applicable. AGP Franklin renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.

 

Terms of Use

Please read these terms and conditions of use (“Terms”) carefully before using the website located at https://www.aspengroveassetmanagement.com/ https://www.strongtowerwealthmanagement.com/ (“Website”) or any of the information or services provided by AGP Franklin, LLC (collectively “AGP Franklin”, “we”, “our”, “us”) in connection with the Website. By using the Website, you acknowledge that you have read and understood these Terms and accept to be legally bound by them. If you do not accept and agree to these Terms, you are not an authorized user of the Website or any of the information or services provided by AGP Franklin in connection with the Website and should promptly terminate all use thereof. The terms “you” and “your” mean you and any entity you may represent in connection with the use of the Website. You may use your browser to download or print a copy of these Terms for your records.

 

AGP Franklin reserves the right to change, modify, add or remove portions of these Terms at any time for any reason. We suggest that you review these Terms periodically for changes. Such changes shall be effective immediately upon posting. You acknowledge that by accessing our Website after we have posted changes to these Terms, you are agreeing to these Terms as modified.

 

These Terms were last updated on January 21,2025.

 

Risk Disclosure

Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.

 

Asset allocation may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss. Performance of the asset allocation strategies depends on the underlying investments.

 

This website is intended to provide general information about AGP Franklin and its services. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.

 

Market data, articles and other content on this website are based on generally available information and are believed to be reliable. AGP Franklin does not guarantee the accuracy of the information contained in this website. The information is of a general nature and should not be construed as investment advice.

 

Please remember that it remains your responsibility to advise AGP Franklin, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.

 

AGP Franklin will provide all prospective clients with a copy of our current Form ADV, Part 2A ("Disclosure Brochure"), Form ADV Part 2B, which is the Brochure Supplement for each advisory person supporting a particular client, and the Form ADV Part 3 (Client Relationship Summary or Form CRS). You may obtain a copy of these disclosures on the SEC website at http://adviserinfo.sec.gov or you may Contact Us at (615) 778-9842 to request a free copy via .pdf or hardcopy.
 

Privacy Disclosures

AGP Franklin is committed to safeguarding the use of personal information of our Clients (also referred to as “you” and “your”) that we obtain as your Investment Advisor, as described in our Privacy Policy.

 

AGP Franklin does not collect personal non-public information through this website; however, the Advisor may collect information from you on application forms, agreements, profile or investment policy statements, and other documents received or processed in relation to services we provide. We also may collect information from other sources.

 

We do not respond to "do not track" requests because we do not track you over time or across third party websites to provide targeted advertising. We may track you across our website to help us improve our content.

 

We may use "cookies" and similar online technologies to keep, and sometimes track, information about you regarding your usage of our website. Cookies are small data files that are sent to your browser or related software from a Web server and stored on your device. Cookies help us to collect information about your usage of our website, including date and time of visits, pages viewed, amount of time spent on our sites, or general information about the device used to access the site, such as the browser used. You can refuse to store or delete cookies by configuring your web browser settings. Most browsers and mobile devices have their own settings to manage cookies. If you refuse a cookie when on our website, or if you delete cookies, you may experience some inconvenience in your use of our website, such as having to re-configure preferences.

 

When you are on this website you may have the opportunity to click-through to other websites, including websites operated by unaffiliated third parties. These sites may collect nonpublic personal Information about you. We do not control sites operated by these entities and are not responsible for the information practices of these sites. This Privacy Policy does not address the information practices of other websites. The privacy policies of websites operated third parties are located on those sites.

 

For a copy of the AGP Franklin Privacy Policy, please click here.

bottom of page