Zoomies

We have three dogs and our youngest is a two-year-old Shih Tzu named Osvaldo Alonso, (his namesake is the captain of the Seattle Sounders Soccer team).

Ozzie, (as we call him) is still in his adolescent stage and is the quintessential puppy. Every night at about 7:30, Ozzie will sit up from his nap and break into a full-blown sprint, racing about our house and circling our kitchen island two, three and even four times.

We lovingly call this “having the zoomies”, wherein he will race around the house, running in circles, skidding and sliding across our wood floors only to suddenly drop down on the dog bed, flop his little legs over and instantaneously fall fast asleep.

Ozzie has the zoomies every night and every night It brings a smile to my face and I marvel at how he can go seamlessly from one extreme to the next and back again. The stock market is eerily similar. One-year prices are going up without a care in the world, and then in the next, they go down. Only over a period of time do you see an average return.

Over the last 50 Years from 1968 till 2018, the Dow Jones Industrial Average, which is a stock market index in the United States that shows how 30 large public companies have traded, has averaged 10.61% per year.

Interestingly, during that same 50-year period, there has been only 2 occurrences where the end of the year total return fell between 8 and 12%. All the other year-end results were either lower than 8% and, in many times, negative or greater than 12% per year.

This data shows that in order to capture the average return from stocks over time, an investor needs to understand that very rarely do you get the average. In fact, the average return of 10.61% or something very close is the anomaly.

In 2017 the US stock market measured by the Dow Jones Industrial and was up 24.39% (had the zoomies!).

Conversely, in 2018, the stock market has been volatile and not much upward progress has been made.

One can attribute this as an anticipated deceleration on economic and profit expansion, ongoing tariff’s or a polarized political climate. Ultimately, the market is like our beloved Ozzie and his behaviors.

As such consider this stage of ‘rest’ in market growth as the part of the cycle of ‘the zoomies’… just like Ozzie, it’s tired, taking a nap and possibly preparing to go rip roaring into another cycle of the zoomies!

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Taylor Easley and not necessarily those of Raymond James. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Investing involves risk and you may incur a profit or loss regardless of strategy selected.