In light of the dramatic stock market sell off we wanted to bring you up to date on our thinking. In our most recent update we reported many short-term technical market indicators had reached oversold levels and the stage was set for a stock market rebound. However, every brief rally has given way to continued weakness.

The additional decline for stocks this month has left the markets extremely stretched on the downside. In technical terms, this is an oversold condition that occurs on rare occasions often coinciding with investor panic. We like to say that the stock market is nothing more than fear and greed superimposed on the business cycle. Where are we today? CNN Business publishes a “Fear & Greed Index” (pictured below), which attempts to measure the current emotional state of investors. It can range from a maximum “Greed” reading of 100 to a maximum “Fear” reading of 0. The most recent reading (3), clearly demonstrates that fear reigns supreme and  historically this level of extreme fear has been an excellent indicator for future stock market returns.

Source: money.cnn.com

Turn Your Emotions Upside/Down

When the Fear and Greed index has been below 15, stocks have earned higher returns when compared to other more muted readings. Legendary value investor, Warren Buffett’s famous quote comes to mind, “Be fearful when others are greedy and be greedy when others are fearful.”

We know it is terribly hard to hold steady at times like these, but we believe the prudent course is to stay patient. Looking past current volatility, while the market deals in probabilities, not certainties, the probabilities favor a strong relief rally can begin soon. We will be watching closely to see if the market can regain healthy upside momentum. In the meantime your investment portfolio is diversified with many high quality stocks and bonds. That combination will produce dependable income while we patiently wait for long term capital gains to accrue.

We appreciate your patience, perseverance, and loyalty to stick with your investment process through the inevitable ups and downs of investing.

Looking forward to a Happy and Prosperous 2019!

Photo by Priscilla Du Preez on Unsplash

Disclaimer: Pring Turner is a Financial Advisor headquartered in Walnut Creek CA, and is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The views represented herein are Pring Turner’s own and all information is obtained from sources believed to be accurate and reliable. This information should not be considered a solicitation or offer to provide any service in any jurisdiction where it would be unlawful to do so. All indices are unmanaged and are not available for direct investment. Past performance does not guarantee future results.

Pring Turner Team
Pring Turner Team
This post is a collaboration of the Ping Turner team. Celebrating over 40 years successfully managing client investment portfolios in constantly changing markets. Pring Turner is a financial planning & investment management team based in Walnut Creek, CA.

Meet the Pring Turner Team

Continue Reading

Articles filed under Market Commentary

2019 Stock Market Overview with TSAA – SF

February 8, 2019 - Joe Turner was the guest speaker at the San Francisco Technical Securities Analysts Association webinar on January 10, to present his 2019 financial market outlook.  The TSAA – SF is the oldest society dedicated to helping investors become more knowledgeable... Continue Reading

2018, A YEAR OF EXTREMES…WHAT’S AHEAD FOR 2019?

January 10, 2019 - 2018 started off with a very strong January for stock investors and finished with December being one of the weakest months in many years! Indeed, this was a year of extremes despite a very favorable economic backdrop. If you knew... Continue Reading

A Slowdown is in the Bag, but What About a Recession?

January 10, 2019 - There is little doubt that the US economy is in a state of slowdown. That’s actually a good thing, because it offers some time to pause and refresh, thereby postponing either a recession, overheating or both. These pauses perform the... Continue Reading

Continued Volatility

December 21, 2018 - In light of the dramatic stock market sell off we wanted to bring you up to date on our thinking. In our most recent update we reported many short-term technical market indicators had reached oversold levels and the stage was... Continue Reading

The Economy is Strong, But…

October 23, 2018 - The stock market caught a second wind during the summer months. After a wild roller coaster ride in the first half of the year, stock indexes finally cleared their late January highs in the last week of the quarter. Your... Continue Reading