Ben Treece: Benghazi, IRS drown out market newsWritten by Ben Treece | | email@example.com
There has been no time in recent memory that we can recall so many major current events making headlines in such a short amount of time. In the last month the U.S. has been following the Jodi Arias verdict, the Cleveland kidnappings, Benghazi whistleblowers testifying in front of Congress, a scandal at the IRS, wiretaps at The Associated Press and a guilty verdict in the Dr. Kermit Gosnell abortion case. Fortunately (or unfortunately, depending on your long or short position), these headlines have taken a lot of attention away from the markets.
Springtime tends to bring about a certain mentality in the investment community referred to as “sell in May, go away.” One explanation for this maxim is that the weather is warm, the skies are clear, and families on both Wall St and Main Street are looking for ways to enjoy the outdoors and to go on vacation. But there is no clear technical reason as to why growth seems to subside in the warmer months of the year.
The aforementioned headlines have also detracted from some major economic headlines in recent weeks. Experts predict that the U.S. budget deficit will come in at $200 billion lower than expected this fiscal year. On top of that, the Dow Jones Industrial Average reached all-time highs this past week. In foreign markets, the Nikkei surpassed the 15,000 mark for the first time in five years. This is great news for investors who went in to the markets eight to nine months ago forecasting economic growth and stability, however summer may see a different hand play out.
As trading volume drops this summer, we expect to see a slight pullback in equities. There will certainly be some advisers and investors who will take their profits and sit on the gains until fall comes around; however, I expect that there will be a number of advisers who missed this rally that will attempt to play the markets in an effort to window dress their portfolios.
While Treece Investment Advisory Corp predicts a pullback, I by no means feel that it will be another 2008, just a minor 5-10 percent correction in equities. Unfortunately, the U.S. economy has not fully recovered from the crisis it experienced in 2008, and we are not seeing headlines that are providing investors with the comfort they need to buy back into the markets. Furthermore, regulations and the costs associated with doing business have hindered some corporations from deploying capital, resulting in stagnant growth.
I want to remind investors that they need to look past the major headlines and look for the news that shows them the true nature of the economy and the markets. We are back on the right track, just at a slower pace than we would like. If our predictions are correct and we do see a pullback this summer, do not be discouraged or disheartened. Remember that your retirement is meant to be a nest egg, and over the course of time its value will ebb and flow. Look for the silver lining during a pullback; a drop in equities this summer means that there will be opportunities for value buys in the fall.
Ben Treece is a 2009 Graduate from the University of Miami (FL), BBA International Finance and Marketing. He is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and a stockbroker licensed with FINRA, working for Treece Financial Services Corp. The above information is the express opinion of Ben Treece and should not be construed as investment advice or used without outside verification.