The media was blaring the bad news headlines again last week. It can be comical when you step back from it – but it becomes tragic when investors actually take action based on the media. Below, I have listed headlines from just two days in the Wall Street Journal last week – that’s right, only two days. If you didn’t know better, you would think that the planet was heading into the abyss of darkness with no return. These headlines were printed from the normally sober Wall Street Journal. And I assure you that it’s worse with the online financial sensationalized sites.
- Stocks, Bonds Flash Warnings Signs
- Recession Risks Grow as Nationalism Rises
- Global Economic Slowdown Deepens
- Markets Wary of Downturn
- Stocks Fall as Doubts Intensify
- Weak German, Chinese Data Feed Fears
- Retailers Feel Holiday Unease as Macy’s Cuts Profit Outlook
- Cisco Growth Forecast Disappoints
- Biggest Bank Stocks Lose Billions in Market Value
- Repo Rates Fuel Concern on Debt
- Ethanol Futures Sink to Five-Year Lows
- Weak Growth Abroad Hurts Oil Prices
- Even Safe Shares Can’t Sidestep Market Selloff
- At 25%, Tariffs Have Firms Squirming
- Markets’ Diverging Paths Baffle Investors
- Stocks Sink as Trade-Talk Outlook Darkens
- Bank Shares Head South on Rate-Cut Expectations
- Strong Forecast Hammers Grain Prices
- Treasuries Gain on Far-Flung Anxieties
- Market Swings Spread Past Stocks
Admittedly, the longer this tariff/trade war drags on, the more likely it is that it could turn into a bigger problem. It bears watching. History teaches that nations must trade with each other. But for now, U.S. corporate profits are at record highs, inflation remains low, and the unemployment level is lower than it has been since the 1960s. Wages and hours worked are up substantially thereby fueling consumer spending. Household debt service ratio is lower than it’s been in over 40 years, and household net worth reached a new high in the 2nd quarter. Productivity and GDP were surprisingly strong in the second quarter – both beating expectations. In sum, things look pretty good here in the world’s largest economy.
As of this writing, the S&P 500 is only off about 5% from its recent high. Please keep in mind that, since 1980, the S&P 500 has retreated – on average – almost 14% in any given calendar year from a prior high point. Yet, it was positive in 29 of those 39 years. Please be careful what you allow into your minds. The media is not your friend. They don’t know you, they don’t know your financial plan, and they don’t care about you. They are there to sell you more media. It’s best to stay focused, stay disciplined, stay patient…and stay invested.
 See J.P. Morgan Guide to the Markets, 2nd Quarter, 2019