Browsed by
Tag: hard

Why And How You Need To Think Hard About The Next Bear Market Now

Why And How You Need To Think Hard About The Next Bear Market Now

Most investors worry about the next market downturn and try to figure out when it will occur. But they don’t develop specific action plans. That’s a major oversight.

You need to plan now for the next downturn.

Back in March when the markets and economy plunged, many people didn’t have plans. Of course, few were expecting a bear market. That downturn was caused by the Covid-19 pandemic, not by changes in monetary or fiscal policy. Some reacted to all the scary headlines about the markets and the pandemic by selling stocks. Others spent a lot of time reviewing as much information as they could and agonized over what to do.

Fortunately for those who didn’t do anything, the markets rebounded quickly after the Federal Reserve opened the money spigots and Congress provided fiscal stimulus. Unfortunately for those who sold in the panic, the markets rebounded quickly.

It’s important to make a plan now for the next downturn. In particular, make plans for what you will do and won’t do under different circumstances. Emotions of the moment will influence your actions less if you develop a plan now. You’ll be less influenced by the talking heads, market noise, and doomsayers. Plus, you have the time to consider all the angles relatively dispassionately. The fact is, most market downturns catch investors by surprise. You need to think hard about a market decline when one doesn’t seem likely. The closer you are to retirement, the more important it is to develop a plan now.

Some people will decide they’re able to ride out any fall in their portfolios. They’ll rebalance their portfolios as stocks decline but not take other actions. Others will decide to reduce their stock exposure but only if markets decline by a certain amount or key economic or market

Read the rest
Why This Stock Market Melt-Up Is So Hard to Handle

Why This Stock Market Melt-Up Is So Hard to Handle

The stock market continued to ascend on Monday, with seemingly no obstacles in sight to keep major market benchmarks from challenging new record highs soon. Hope for help from Washington beat down any worries about the coronavirus pandemic, and high-flying tech stocks led the Nasdaq Composite to another huge gain. Rises for the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) were a bit more muted but still added to their recent rallies.

Today’s stock market

Index

Percentage Change

Point Change

Dow

0.88%

251

S&P 500

1.64%

57

Nasdaq Composite

2.56%

296

Data source: Yahoo! Finance.

When the stock market crashes, it’s easy to understand why so many investors get uncomfortable. Yet in many ways, when the market climbs precipitously — as we’ve seen over the past several days — it can be even harder for investors to handle. That might not seem to make sense, and it wouldn’t if everyone followed one simple principle. But market melt-ups reveal the shortcomings of one of the biggest mistakes that many investors make.

Tons of market volatility

We’ve seen huge ups and huge downs throughout 2020, and even though there hasn’t been a market crash the size of what we saw in February and March, it’s still been staggering to see the pace at which market sentiment can turn. Throughout much of the summer, markets gained ground, with many indexes punching through old highs at the beginning of September.

^DJI Chart

^DJI data by YCharts.

That was followed by an abrupt downturn that took most of September. Yet after that correction, markets have moved higher quickly and furiously, with major benchmarks seeing gains of as much as 12% from their lows just a couple of weeks ago. Volatile stocks such as Tesla (NASDAQ: TSLA) have seen even more dramatic moves in

Read the rest
Third-Quarter 2020 Market Commentary: Despite Uncertainty Around U.S. Election And Hard Brexit, Hope Springs Eternal For COVID-19 Vaccine And Government Relief

Third-Quarter 2020 Market Commentary: Despite Uncertainty Around U.S. Election And Hard Brexit, Hope Springs Eternal For COVID-19 Vaccine And Government Relief

Data Source: Bloomberg

Source: PxHere

3D Note: As part of our ongoing commentary concerning the coronavirus global contagion and its impact on human and global markets, we remind readers that the situation remains fluid as evidenced by volatile market reactions to most new developments, although the pace of these reactions seems to have slowed down from March/April. In addition to our bi-monthly articles and periodic podcasts, 3D has started publishing mid-month updates to our advisor partners as we navigate through the coronavirus pandemic. Please contact us if you would like to be added to the distribution list.

Market action during the third quarter was largely uneventful despite a moderate pickup in volatility and a “pause” in the global reflation trade. The first two months saw rallies in the global reflation trade, broadly represented by growth technology stocks, emerging markets, commodities/non-U.S. currencies, and corporate credit, only to see investors back away from this trade in September due to technical reasons (e.g. over-exposed long positioning in large-cap technology stocks via call option purchases and speculative non-commercial long positioning in EUR/USD) and diminishing prospects over a second U.S. pandemic relief spending program as well as rising prospects over Hard Brexit. The end of the quarter saw elevated (i.e. buy-the-dip) risk sentiment after having peaked in mid-August, prior to the early September sell-off (we wrote about this in peak in investor sentiment in mid-August titled “Market is Euphoric”).

The furious global technology growth rally that characterized the early quarter advance spilled over into the first week of September before the “trade” unwound itself following reports of a large options “whale” (later to be revealed Softbank – Japan’s publicly-traded venture capital fund) having bid up single stock call options on key technology stocks, forcing options market-makers to buy the underlying stocks in order to

Read the rest
‘It is really hard to imagine anything more cruel’

‘It is really hard to imagine anything more cruel’

Cook County Board President Toni Preckwinkle made it clear on Wednesday: There is no Plan B for the hundreds of thousands of her constituents who risk losing health insurance should Republicans in Washington succeed in repealing the Affordable Care Act.



Toni Preckwinkle looking at the camera: Cook County Board President Toni Preckwinkle speaks on the impact of a potential repeal of the Affordable Care Act during a news conference at Cook County Health in Chicago on Oct. 7, 2020.


© Antonio Perez / Chicago Tribune/Chicago Tribune/TNS
Cook County Board President Toni Preckwinkle speaks on the impact of a potential repeal of the Affordable Care Act during a news conference at Cook County Health in Chicago on Oct. 7, 2020.

She warned of a possibly cataclysmic blowback within Cook County’s public hospital system that runs a massive insurance program made possible by the ACA, also known as Obamacare. Without it, there is no backup for many of the 370,000 low-income enrollees who have come to rely on the county’s largest Medicaid managed care plan to access health care, she said.

“Here’s the bottom line: The repeal of the ACA would not only financially cripple Cook County Health by dramatically increasing the amount of uncompensated health care we provide, it would be catastrophic — catastrophic — for the patients we serve,” Preckwinkle said at a news conference with several Democratic congressmen at Cook County Health’s Chicago headquarters.

Illinois Democrats have sounded the alarm on the implications of repealing the Affordable Care Act before, but Preckwinkle said Wednesday that now more than ever, there is “a very real threat this time around.”

That’s because the U.S. Supreme Court is slated to hear arguments on the law’s constitutionality on Nov. 10 after GOP officials sued the federal government in 2018 to strike down Obamacare. And with the pending confirmation of President Donald Trump’s nominee Amy Coney Barrett to the nation’s highest court, the cards could be stacked against the ACA.

Sign up for The Spin to get the top stories in politics

Read the rest