My work for Forbes.com aims to break investment myths and bring common sense analysis to my audience. The Market Tanked Yesterday… but It Should Have Soared. The Market Tanked – Does it mean anything?

It is the dividends you will spend or reinvest. In the meantime, think differently, buckle down, and stay safe, both in your health and wealth. In other words, if unemployment had been 7% instead of 3.5%, if the stock market had been 10% from its 5-year low instead of at its all-time high, and if global central banks had kept interest rates above zilch the past several years, the past month would have been different. Passive investing has become too popular, convinced people its easy. President Trump – no unbiased bystander – regularly tweets the same thing: Best economy ever! It’s not hard to understand why Trump wants a more accommodative Fed. But Fed Chairman Jerome Powell held the line, announcing, “Let me be clear.

Taken together, these points remind us that things are never as good as they seem, and sometimes it takes a crisis “out of left field” to correct massive overvaluation, leverage, fiscal irresponsibility, etc. For the twenty-four years from 1994 through 2017, dividends paid by stocks in the Dow Jones Industrial Average increased from $105.66 to $523.94. Lower interest rates are rocket fuel for the economy. That’s the story of most bear markets, ultimately. Investors should applaud Powell’s decision, not grouse about it. Rob Isbitts Senior Contributor. Corporate profits are up. The central bank wanted to bolster the economy amid trade friction with China and economic weakness in Europe and elsewhere. The U.S. economy is quite good.

What I said was, it’s not the beginning of a long series of rate cuts.”.

And there are serious ramifications here for investors. We are in a new era of “administrative markets,” where stock returns are affected as much by government policies as they are by economic growth and corporate profits. So could someone please explain why the best economy ever needs still more rate cuts – on top of $800 billion of deficit spending? What is tanked? Would the S&P 500 have fallen hard? Central banks may be powerless at this point. The futures market had been pricing in a 100% chance of this for weeks now.

Markets. Is the Stock Market “Detached From Reality”? Corporate earnings stagnant, prices elevated. However, you do not spend stock values. I have spent the last 2 decades helping people understand Wall Street. Meaning of tanked as a finance term. Sungarden provides Advisory Services through Dynamic Wealth Advisors. Over the last few years, the Fed raised interest rates nine times in an attempt to normalize rates. It’s like a house.

Not only are earnings going to be knocked down for a while, many dividend payments could be suspended. reduced its benchmark rate a quarter point. Wages are up. Something gave, but not in the usual way. But, what does it matter? In perhaps the most widely anticipated rate cut in U.S. history, the Federal Reserve reduced its benchmark rate a quarter point yesterday to just below 2.25%. That’s exactly why it doesn’t need to be artificially goosed.

Don’t get me wrong. Nailed it. Why The Market Tanked, Where It’s Going And How You Can Thrive .

My investment strategy website is www.TheHedgedInvestor.com. Daily or weekly drops really don’t mean much, financially. Connect with me on LinkedIn, follow me on Twitter @robisbitts.

It is a sunk cost. Just as too many laws and regulations can stifle innovation, business formation and economic growth, so too can heavy-handed stimulus undermine markets – by making them dependent on government action and depriving us of the tools we’ll need to fight future downturns. Many individual investors (including those with 401k and 403b plans) are in it for the long haul. Government is most effective when it gets out of the way and interferes with markets as little as possible. And if you reinvest, you are buying additional stocks at a sale price.

The global health crisis has made the rest of those items seem relatively meaningless for the time being. I doubt it. For those invested in stocks, it is a lousy feeling… but, does it mean anything?

All Rights Reserved, This is a BETA experience. The good news: the bottom will be in many ways a mirror image of the recent top in the stock market and economies of the globe. A thought-leader, 3-time author and former. No, this was market participants – along with President Trump – wanting the promise of still more near-term rate cuts. While the human threat, the day-to-day tragedy and the historic uncertainty that it has caused are undeniable, I want you to think about something. Bailouts will push out the inevitable. I have spent the last 2 decades helping people understand Wall Street. The reason the market fell so far, and could well fall much further, is because it was on thin ice to begin with. And that will tell you that the transition back to more fruitful, traditional investing ways is upon us. As long as the dividends keep being paid, and based on the experience illustrated above, there is no reason to expect otherwise; you should not be overly concerned about falling values in the market as a whole. Regardless of the stock values, except for super-severe drops, dividends do not decline. For those invested in stocks, it is a lousy feeling… but, does it mean anything? However, recent Fed moves have only been another sugar-high for the stock market. During this same period the DJIA rose from 3,757 at the beginning of 1994 to close at 24,719 at the end of 2017. Coronavirus, U.S. Election, Oil War, North Korea. If you typically buy stocks that do not pay dividends, then you are in a different circumstance and what I wrote would not apply to you. A thought-leader, 3-time author and former mutual fund manager.

Still too complacent, selloff will be a shocker, as in past bear markets. However, based on the requests I get for my goodies ... Sixty percent of the Washington Football team is owned by one person and forty percent by three other people. But if the refs can’t stop blowing the whistle, changing the rules and interfering with the game, it won’t be enjoyable to watch… or to play.

This blog is written primarily for clients and also to share some personal, but not political, reflections and opinions. For the year ended Dec 31 2017 dividends paid were $523.94. Yet this was something unusual, a preemptive action. That has been good for the economy.

Unemployment is near a half-century low. I maintain a running list of what I consider to be the 10 biggest investor worries, ranked in order of significance. Those that regularly add to their investments actually have the opportunity to buy at lower prices – so why be upset when values drop?

Yet this was something unusual, a preemptive action. I spent the first decade of my career on Wall Street. What are we going to do in the next economic downturn or, worse, financial panic? Only when you die and your family sells the house, will that value be meaningful, and then, will you really care?

Panic is NOT the final stage. Even though the Federal Reserve made a widely anticipated rate cut yesterday, the Dow tanked on the news. In perhaps the most widely anticipated rate cut in U.S. history, the Federal Reserve reduced its benchmark rate a quarter point yesterday to just below 2.25%.

Every time the Fed cuts rates, it takes another arrow out of its quiver. Remember when North Korea was our big issue? But the dual mandate of the Federal Reserve is stable prices and maximum sustainable employment.

Momentary decreases should be no harm to your plans. My approach to the stock market is that it should be part of a properly considered investment plan as a method to provide long-term financial security.

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