Up on the Rooftop
(Sing to the Christmas classic ‘Up on the Roof Top’)
Up on Wall Street everyone cries
Profits drop before your eyes
Sell all my holdings and go to cash
Time to panic and hide your stash
HO HO HO where’d my money go
HO HO HO where’d my money go
Up goes the Dow Jones tick tick tick
Down goes the S&P it makes me sick
Look at my statement the value falls
I could sure use Santa Claus
Where’s ‘Santa’s Rally’ we had last year
I can’t wait for some Christmas Cheer
HO HO HO where’d my money go
HO HO HO where’d my money go
Up goes the Dow Jones tick tick tick
Down goes the S&P it makes me sick
I want some stocks that will do real well
Exxon and Chevron would ring my bell
Marathon Petroleum and Devon too
If it’s good enough for Buffett then it’s good enough for you
HO HO HO where’d my money go
HO HO HO where’d my money go
Up goes the Dow Jones tick tick tick
Down goes the S&P it makes me sick
You shouldn’t panic in this Bear Market phase
Listening to talking heads is all the craze
Don’t be anxious, cry or sob
Try not to worry ‘cause that’s my job
So I’ve had this tune stuck in my head for weeks now and I just had to share it in hopes that it would leave me alone. I didn’t want to get into copyright trouble by using the lyrics without permission, so I took some liberty with the words. Seems to be a bit timely don’t you think?
This time of year I’m asked the same question over and over again and truly I’m tired of it: “What do you want for Christmas?” My answer is always the same, “a Red Ryder BB gun with a compass in the stock.” I’m guessing that you already know the answer. If I can’t get that then I want the FED to stop raising rates, inflation to ease up and for this market volatility to go away.
Seriously, this time of the year points us all to wondering “where is the market going and what should I do?” It’s been a pretty rough year so far with the exception of the past month’s early Santa Claus rally. That has been an early gift to us all, and a reminder as to why we are always telling clients to stay in the market. You can never tell when these Bear market rallies will occur, nor when they will do an about-face and head the other way. But the impact can be dramatic. During the period from 1999 thru 2021 if you missed the top 25 trading days in the S&P, your returns would have exceeded 29% - not bad but not great. But if you only missed the top 10 trading days, then your returns exceeded 173% - now we are looking better. And if you stayed invested the entire time, you could have seen a 498% return. Past performance is no guarantee of future results, but you get the picture.
So where do we go from here? Next year, like 2022, will be driven by the FED, and as they say, you can’t fight the FED. They will continue to raise rates until they see inflation headed south. Likewise, they will focus on the labor market and will continue to hike until employment figures slow. They will do this while trying to keep us out of recession. This all seems to be wishful thinking, but the market is prepared to do its part. Just look and see what it did over the past month. Just a hint that future hikes might be less than anticipated, and the market responds with a 15% increase in the Dow, an 11% increase in the S&P, and a 9% rise in the NASDAQ. This more dovish FED should reveal itself sometime around the 2nd quarter.
So what action should we take? Make sure your cash needs are met for those foreseeable items. And if you’re invested, stay invested. Other than that, take some time over the next month and reflect on how truly blessed you are. We live in the greatest Country in the world. Even with all of our warts, we still have freedoms that most countries can only dream of. If the opportunities allow, give some blessings to your neighbors. Look for ways to give rather than receive. And above all:
You shouldn’t panic in this Bear Market phase
Listening to talking heads are all the craze
Don’t be anxious, cry or sob
Try not to worry ‘cause that’s my job
Happy Holidays!!!
Any opinions are those of Frank Houston and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance is not a guarantee of future results.