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.

Agree or disagree with his approach, there is a bipartisan consensus on Capitol Hill that China has gamed the system for too long, its global influence is growing, and a more level play field is needed.


Sudden drops can be unsettling for investors. Yet, the S&P 500 Index2 is down a modest 6.1% from the July 26 record close through the most recent bottom on August 14 (St. Louis Federal Reserve data as of Aug 26).

  • It’s nothing out of the ordinary.
  • The average intra-year peak-to-trough decline since 1980 is 14% (LPL, St. Louis Fed), even as the index averaged a 12% annual gain.

Investor’s corner

As we’ve seen in past declines, the general belief the economy isn’t set to slip into a profit-killing recession has softened the downside. A change in posture by the Federal Reserve has also helped.

While recessions and market volatility are inevitable, stocks have historically had a long-term upward bias – one that is captured by a well-diversified plan.

If you have a comprehensive financial plan that has you on the path toward your financial goals, you are to be congratulated.

You have chosen the less-traveled path.