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Pinball Machine - August 28, 2019

President Trump tweets new tariffs – stocks fall.

Trump tweets partial reprieve on tariffs – stocks jump.

Trump “orders” U.S. firms to leave China – stocks fall.

Trump offers a more conciliatory message on China – stocks jump.

It sometimes feels like investors are inside a pinball machine.

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Uncertainty - August 14, 2019

Oxford defines uncertainty as “not completely confident or sure of something.”

There is always some degree of uncertainty for stocks.

  • Stocks have a long-term upward bias, but no one can guarantee where a major market index like the Dow1 will be one year from today.

Investor sentiment is sometimes driven by what I call “heightened uncertainty.” In other words, the number of potential economic outcomes increases.

  • These potential outcomes are usually to the downside.

Geopolitical issues, such as unrest in Hong Kong, can influence sentiment. Or, how might the U.S./China trade war affect the economy?

  • The additional scenarios create heightened uncertainty and market volatility, as investors attempt to price in how rising trade tensions may affect the economy and corporate profits.

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It Only Takes a Tweet - August 12, 2019

My goal in these weekly commentaries has been to educate, touch on important high-level themes, relay them in a conversational tone, and view events through the narrow lens of the investor. I must admit, when markets and politics collide, that goal of the narrow lens can be difficult. That said, with as much objectivity as I can muster, let’s recap recent events.

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