Womack Investment Advisers

When it comes to investing, people tend to have short memories. During bull markets, as stock values push higher, many investors want to increase their exposure to stocks. Why wouldn’t they? When volatility is relatively low, it can be difficult for investors to recall why they limited their exposure to higher risk assets. Similarly, when a bear market arrives and volatility increases, investors often want to retreat to the safety of more conservative investments. After all, when volatility increases and stock values fluctuate dramatically, it can be difficult for investors to recall why they chose to invest any portion of their portfolios in stocks. The fact is, investors often fall prey to a phenomenon known as recency bias. People tend to believe what is happening now will continue to occur in the future. It won’t. The economy tends to cycle from expansion to contraction and back to expansion. Stock markets tend to cycle from bull markets to bear markets and back to bu...

Among market-moving economic reports the monthly payrolls report is among the most influential—and this week’s report was no disappointment.   Almost all analysts were caught flatfooted at its release, with the consensus forecast expecting a loss of 7.25 million additional jobs and an unemployment rate of 19.0%.   Kate Bahn, director of labor market policy and economist at the Washington Center for Equitable Growth, was only able to mutter “WTF” at the release, while David Donabedian, chief investment officer at CIBC Private Wealth Management was quick to adapt to the new data stating that while the economy remains in a deep recession, “it is also clear that the recovery has begun, and that it is ahead of schedule.”   But Paul Krugman, Trump-hating economist at the New York Times, suggested that Trump had somehow “gotten to the BLS” and cooked the numbers (he later apologized, sort of).   Chart from Marketwatch.com.