Market Volatility: Focus on Facts not Headlines

Recent volatility is yet another reminder that investors need to put things in perspective and focus on the long-term.

They must try as hard as possible to tune out the noise - even though that's getting harder and harder in our sound bite society.  We are all bombarded with data and very little depth.

The yield curve inversion that occurred on Wednesday, August 14, 2019 spooked markets and had every "talking head" saying this is a tried and true indicator of a coming recession. Yes, wInvestors must try to tune out the noisehen the yield curve has inverted that has preceded a recession but it has absolutely no capability to actually tell us when that recession will hit. It can be years off and stock markets have typically done very well in the year following a yield curve inversion.  That garnered all the news but has little bearing on upcoming market performance. 

Why are we not talking about the nearly $16 trillion in global government debt that is yielding a negative interest rate right now?   

That's a real problem and something we haven't grappled with before. In my opinion it is far scarier then an inverted yield curve. 

Why are we focused on China instead of Hong Kong?  Less then 3% of total US GDP is tied up in trade with China and still less then 4% of China's economy is tied up in trade with the US.  If our trade went to zero it would hurt both economies but it wouldn't be catastrophic. 

In Hong Kong right now they are pushing back against mainland China's attempts to take away some of their freedoms. In my opinion, this is far more important to the long-game but it doesn't garner nearly as much news. 

Lets Focus on the Facts Not the Headlines.
Let's look for substance and depth in a world focused on instant responses in 140 characters or less. A tried and true process that always wins in the long-run.

The material and opinions provided are meant for general illustration and/or informational purposes only and should not be construed as investment, tax, or legal advice for any individual. Although the information has been gathered from sources believed to be reliable, each reader must decide whether it is valid and applicable to his/her own unique circumstances. To determine which investment(s) may be appropriate for you, consult your financial adviser prior to investing. Any economic forecasts made in this commentary are merely opinion, and any referenced performance data is historical. As a result, neither is a guarantee of future results, as all investments involve risk. All referenced indices are not managed and may not be invested into directly. Investment advice offered through Resources Investment Advisors, Inc., an SEC-registered investment adviser.

James Battmer on August 22nd, 2019

Posted by James Battmer

James Battmer currently serves as Chief Investment Officer for Resources Investment Advisors. In his role, James is responsible for providing executive oversight of the firm’s investment strategy and execution, in addition to overseeing all institutional and high-net-worth client accounts. James has 20 years of experience in the industry, his experience lies in macroeconomic policy, fixed income management and equity selection. Prior to joining Resources Investment Advisors, James previously worked at UMB Bank and Morgan Stanley.

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