Womack Investment Advisers

How are you feeling about financial markets? Some votes are still being counted but investors appear to be happy with the outcome of mid-term elections. Major U.S. stock indices in the United States moved higher last week, and the American Association of Individual Investors (AAII) Sentiment Survey reported: “Optimism among individual investors about the short-term direction of stock prices is above average for just the second time in nine weeks…Bullish sentiment, expectations that stock prices will rise over the next six months, rose 3.4 percentage points to 41.3 percent. This is a five-week high. The historical average is 38.5 percent.” Before you get too excited about the rise in optimism, you should know pessimism also remains at historically high levels. According to AAII : “Bearish sentiment, expectations that stock prices will fall over the next six months, fell 3.3 percentage points to 31.2 percent. The drop was not steep enough to prevent pessimism from

As Americans prepare to go to the polls in what is likely to be one of the heaviest turnouts ever for a midterm election, mutual fund company Oppenheimer released a research note regarding midterm elections and their effects on the market.   They note that midterm elections rarely favor the political party of the sitting President.   Their research notes the party of the President almost always loses House and Senate seats in the first midterm election, even if the President is relatively popular.   Many investors fear that if Republicans lose control of the House it would derail President Trump’s pro-business agenda and bring an end to the current historic bull market.   However, the Oppenheimer report showed that of the 15 times that the House changed the party in control at midterm elections, 12 (or 80%) of the following years were positive, and that overall 78% of the years following midterm elections were positive.  

If you’re concerned your adult children are not saving enough for retirement, send them a photo of themselves that’s altered so they appear to be older, perhaps age 60 or 70. (You can do this for yourself, too.) One reason Americans don’t begin saving early enough, or save as much as they should for retirement, is ‘present bias.’ When asked to choose between two possible rewards, research shows that people tend to choose the one that will be received sooner. For instance, imagine you have chocolate and fruit salad. Which will you choose to eat today and which will you choose to eat next week? Researchers found that 83 percent of people chose chocolate today and fruit salad next week. Try this one. You can watch one movie today and another movie tomorrow. Your choices include ‘Anchorman,’ ‘Clear and Present Danger,’ ‘The Piano,’ and ‘Schindler’s List.’ What movie will you watch today? Which will you watch tomorrow? Researchers found a higher percentage of par

Stocks recovered some ground last week and then stumbled over unemployment. Major U.S. stock indices faltered Friday after the Bureau of Labor Statistics (BLS) reported on a popular ‘lagging’ economic indicator – unemployment. (Remember, lagging indicators describe what has happened in the past.) The BLS reported: “The unemployment rate remained at 3.7 percent in October, and the number of unemployed persons was little changed at 6.1 million. Over the year, the unemployment rate and the number of unemployed persons declined by 0.4 percentage point and 449,000, respectively.” Reuters reported the number of Americans receiving unemployment benefits was at the lowest level in 45 years. That’s good news, but it’s old news. Again, unemployment is a lagging indicator and the report reflected what happened in October. The stock market, on the other hand, is a ‘leading’ economic indicator. It moves in response to investors’ expectations for the future – and recent gyra