Rhythm is Broken

Sometimes the stock market achieves a nice rhythm. We have recently seen such a period. After a poor start to the year, good economic news prevailed and the markets increased. Today in Reuters News Service, I noted a number of very good traits that should continue the momentum of growth in the economy. Factory orders rebounded from an eight-month low. Automobile sales increased. A gain in construction spending was reported, despite unseasonably cold weather! Consumer spending increased, with spending on services up 0.9%, the biggest gain since October 2001. All good news, and yet, as of this writing, the stock market is down more than 1%. The break in the rhythm is because of the uncertainty surrounding Russia’s military intervention into Ukraine. As I have stated in the past, “the markets do not like uncertainty.” We have no way to dispel this uncertainty, and this is why we have a diversified portfolio. In times like this, investors tend to drive up the value of more defensive issues, such as bonds. I will be watching the situation in Ukraine to determine the best investment course of action. For now we will make no changes.

Ed Mallon

Monday, March 3, 2014 at 11:21 AM