There seems to be an unusual number of events weighing on the stock market, both positive and negative, so I thought that I would try and list the most influential ones.
As an investment adviser, I always like to have a good grasp of what I believe is influencing the investments that I manage for clients. I know in the long term that it is a company’s fundamentals that drives its stock price, but understanding the external factors influencing that company’s business help me in determining entry and exit points in an investment to, hopefully, maximize profit.
So, here is what I think is driving the markets right now, in no particular order:
| Positives | Negatives |
| · Low interest rates | · Trade War/Tariffs |
| · Low unemployment | · Impeachment |
| · Cheap oil and natural gas | · Global economic slowdown |
| · Fed in easing mode |
These observations are big picture, macro economic views. I look at these to get a feel for where our economy, and subsequently stock prices, are heading over the next 6 months.
Also, looking at the recent financial headlines, you would think the markets would be doing poorly, but stocks are having a very good year, with the S&P 500 up nearly 20% for 2019. There is, of course, a Wall Street saying for this: Stocks climb a wall of worry. Plus, historically, speaking, we are entering the best 6 months to be invested in stocks, November thru April.
Personally, out of all the factors listed above, low interest rates have the biggest influence on stock prices. This is because, investors can’t get a decent rate of return in bonds or savings accounts, so they have to look to stocks to get a decent bang for their buck.
Stepping back from all the noise and doing this assessment of market influencers can help you make the right investment decisions.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
