Yep, let’s definitely be clear, the headlines this year have contributed to some very serious cases of investor whiplash. The Fed and interest rates, the U.S. trade telenovela, Russians doing things they probably shouldn’t be doing, and of course impeachment, have all been hogging the spotlight for the market's attention and they have been pretty effective...kinda.
Whenever these news stories grab attention, the market reacts - but just briefly. The short-term volatility from these headlines is just that, short term. Most investors are playing a long game. The main market drivers aren’t headlines but economic and corporate fundamentals.
Check out our rundown on the current fundamentals:
- Corporate earnings are solid
- Unemployment is at a 50-year low
- Job growth is super strong
- Wage growth is steady
- Consumer spending has risen
- Our GDP is decent
- Stocks are now less than 1% below their all-time high
There have been two presidential impeachment proceedings in recent history: Nixon in 1974 and Clinton in 1998 and here is how the market reacted...
- In 1974, stocks dropped 10% in the six months following the impeachment announcement but the economy was already in recession. Inflation was high, unemployment was up, and the Fed had been hiking rates. No bueno.
- In 1998, following the vote for Clinton’s impeachment, the stock market rose 38% over the next six months because the economic fundamentals were strong. Unemployment was down (around 4%), inflation was modest and interest rates were stable. Not too bad.
Remember that consumer spending accounts for 70% of
GDP
and it looks like folks are still shoe shoppin’.
Wall Street nerds consider an investment time-horizon of 10 years or more, long-term.
If you are investing for your retirement or just to stack dough for life, your time horizon is most likely long-term. Focus on making sure your portfolio is diversified with both stocks and bonds. The right mix of asset classes can help to soften the bumpy ride of volatility. So,
chillax
and please pop a bottle of something...preferably rosé. Don’t sweat the small stuff. You’re pursuing
long money
so you're playing the long game. You’ve got time....and you've got
StocSavvy
!
