Speaker 1:
Hello, my name is Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas. And today I have again with us Nick Rero, registered relationship manager, and we had a few things to go over a new chart. So it seems like right now we like bringing you information on different charts, but we found this very interesting and wanted to go over that. Today is Thursday, August the 22nd, 2024, and it's been kind of a wild ride the last couple of weeks. And I know we've put out a few videos on the subject. If you remember August the fifth, which was that Monday that was so bad. Then right after that the market's kind of rallied a little bit and we've had a nice bounce since that August 5th, if you remember what was going on at that point. It was the week before the July employment numbers came out and they were a little worse than anticipated. Ultimately. Now looking back, probably not as bad as what the market took it as. And then you had that carry trade, if you remember out of Japan where they were borrowing money at low interest rates, the Japanese interest rates went up. It spooked the market, which created a lot of selling. And so if you remember at the time we were kind of saying we thought that that would play out, which apparently it looks like it has, but it was a little scary there.
Speaker 1:
And now kind of looking back, people kind of overreacted a bit. There was a lot of calls at that point about the Federal Reserve, maybe having to step in and do an emergency lowering of interest rates before their next meeting, which is here in September. Some people were even calling for a 75 basis point cut, which if you remember is 75% of 1% cut to the rates and not even wait for that next meeting, do it as an emergency. We didn't think that that was probably going to happen or likely to happen. And it doesn't look like at this point unless something drastic happens that it will. But more than likely they will start lowering rates for the first time in a number of years here at the next meeting. The data since then, since early August has come out and it's kind of showing that the economy is slowing a bit, but the people at the Wells Fargo Investment Institute still that we think it's lowering, we don't think it's going to push us into a recession at this point, which is probably good news.
Speaker 1:
We talked last time about good news being news and bad news being good news. It seems like we're kind of back in a normal world where bad news is bad and good news hopefully helps the markets. But since here in the last two or three weeks, stocks and bonds have done better. Interest rates have come down a little bit. Bond prices have gone up. Stocks, as we've talked about, we're getting back to to where we were at the peak of mid-July. Now Nick is going to talk a little bit more about this chart and it's the title of its Lessons from the Markets Best and Worst Days. And it's a theme that we've discussed before a number of times, but it's a different way to look at it. And I found it very interesting because even though we have had a good bounce since August the fifth, I think the volatility is still going to be there.
Speaker 1:
We think there's going to be a trading range here. We're getting close to a top portion that it could pull back. No one knows for sure, obviously, but I found this interesting. I read this earlier this week that talked about September since 1950 has been the worst month in the stock market. Well, we're coming up on September. Is that going to play out this year? Last year it did. It was a pretty rough time in the stock market last year, and then October was pretty rough. And then November and December really good, but last year it did play out where September was pretty rough. I don't think it was the worst one, but it was a bad month. Could that play out here? Possibly. On another note, I've forgotten this, but April is supposedly the best month or not, supposedly April is by numbers the best month.
Speaker 1:
And remember back to this April, it was pretty rough in the markets. And so you can't really take all these seasonal times as gospel, but it does lead you to believe that hey, there's an election coming up. The markets have run up pretty good here lately. The economy is slowing, although we don't think it's going to slow enough to push us into recession. So there's still a lot of uncertainty out there, which could lead to more volatility. And we love the volatility on the upside, but it's that downside volatility that always kind of scares us. And so I'm going to share my screen here and let Nick step in and kind of talk about this chart.
Speaker 2:
So this week's chart is lessons from the market's best and worst days. And I like this chart because it goes back to 1995 and it shows the 20 best days for the s and p 500 and the 20 worst days. The 20 worst days are indicated there by those purple diamonds. And the 20 best days are indicated by the blue circles, the circles, orange circles. Thank you. And what you'll notice kind of immediately there is that we have a big cluster of the worst days in 2008 and a big cluster in 2020. But on the flip side, which you'll also notice is that you've got a cluster in that 2008 to 2009 range for the best days that the s and p has seen. And the same is true in 2020. So it's kind of like a mirror image of one another. And so the takeaway here is that oftentimes what we see in the market is that the best days are quickly followed by some of the worst days.
Speaker 2:
And so short-term volatility, it's always going to be unsettling. Of course it makes me sick to my stomach. But what we have to remember here, and this is kind of the guidance that the Wells Fargo Investment Institute has reiterated time after time again, they really haven't changed over time, is that yes, short-term volatility as unsettling, but generally it doesn't make a whole lot of sense to react to it just simply because if you get out of equities entirely or partially when we have the worst possible days, then you would have to be right getting back into the market. And when that is, nobody knows exactly when. So it generally makes the most sense to stay consistent over time, and that's what the Investment Institute has kind of been saying time and time again.
Speaker 1:
And so I think that's a good point now as we always talk about if you need money, if you have a big purchase coming up, then yes, it may make sense to get out of the market. If your portfolio was too aggressive, it's always not a bad idea to at least talk about making it a little more conservative. But if the portfolio is still built for what your goals are, then as Nick was just kind of showing there, a lot of times it makes the most sense to try to ride out those scary times because the good times are usually not too far behind it, and then vice versa, it kind of goes back and forth when you get in those real volatile times. And so I found that interesting. I know we've talked about it before. Let me stop sharing my screen here.
Speaker 2:
And this is kind of similar to the August the fifth stuff, right on August the fifth. That was probably one of the worst days we've seen this year, but shortly after that it did come back. So it may not be exactly this fall on this chart here, but the principle is the same.
Speaker 1:
Exactly, exactly. So as always, if you have any questions about this or are anything else specific about your situation, please let us know. If there's something else you'd like us to talk about, please send us a message and we'd be glad to talk about it. We're just trying to find things that pique our interest and wanted to pass it along. So I hope you have a great day and we look forward to talking. Thank you.