Uncertainty - August 14, 2019

Oxford defines uncertainty as “not completely confident or sure of something.”

There is always some degree of uncertainty for stocks.

  • Stocks have a long-term upward bias, but no one can guarantee where a major market index like the Dow1 will be one year from today.

Investor sentiment is sometimes driven by what I call “heightened uncertainty.” In other words, the number of potential economic outcomes increases.

  • These potential outcomes are usually to the downside.

Geopolitical issues, such as unrest in Hong Kong, can influence sentiment. Or, how might the U.S./China trade war affect the economy?

  • The additional scenarios create heightened uncertainty and market volatility, as investors attempt to price in how rising trade tensions may affect the economy and corporate profits.

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It Only Takes a Tweet - August 12, 2019

My goal in these weekly commentaries has been to educate, touch on important high-level themes, relay them in a conversational tone, and view events through the narrow lens of the investor. I must admit, when markets and politics collide, that goal of the narrow lens can be difficult. That said, with as much objectivity as I can muster, let’s recap recent events.

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Trade Wars – Tit-for-Tat Retaliation - August 7, 2019

The U.S. ratchets up trade tensions by slapping a 10% levy on the final $300 billion in Chinese imports. China retaliates by weakening its currency.

The early read—the heightened uncertainty takes a toll on stocks.

Unlike prior barriers, the latest Chinese tariffs, which take effect September 1, hits mostly consumer goods.

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