Thoughts {05.19.16}

The S&P 500 has spent two months going basically nowhere.  It closed on March 18 at 2,047.00 and closed last night at 2,045.60.

Stocks are getting slightly oversold by our work on a short term basis.

Goldman Sachs thinks stocks are going nowhere for the next year.  See here.

Everybody should go read from the Chicago Tribune this article,  "Why Do We Stink at Saving Money? We're Human".  Key Takeaway:

"When it comes to managing our money, being a human being can be downright dangerous. We suffer from two biases when markets are rising: overconfidence in our own abilities to pick winners and optimism, which convinces many investors that they can outperform the market.

Conversely, when markets are diving, we suffer from loss aversion (My dad used to refer to this as the investor line in the sand: "If my portfolio goes below X, I'm getting out!"), which can prompt us to withdraw capital at the worst possible time. When everyone else is selling, there is also a herding effect, when we do what everyone else does. And of course, many investors micromanage their portfolios, whereas, according to Dan, "you will make more money the less you muck around with your accounts."

All of these behaviors help explain why average stock investors lag the S&P 500 index by 1-3 percent annually and active traders often lag by more than 4 percent annually."

The markets sold off yesterday after the release of the Federal Reserve minutes indicated an interest rate increase is more likely in June or July if the economy continues to improve.  Investors hate the idea of higher rates because it brings on more expensive money and makes the dollar less competitive versus other currencies.  Probability suggests at the most we're going to get one or two more rate hikes this year and then we'll be done.  If we can't handle the US going from 'basically free" money to "a little less free" money then we're in worse economic shape then we thought.  Even so, this kind of news is the sort of thing that likely makes that uphill slog for stocks over the next few months a bit of a steeper grade to climb. 

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time without notice.