People in the Mid-West have an expression about the weather; it goes “If you don’t like the weather in (for example) Chicago, just wait twenty minutes”. Sectors of the financial markets can be a bit like that too. But, while some days are dogs, every dog has his day.

About a year ago a staggering number of pundits — as well as financial analysts — were declaring that Retailers were gasping for air and the situation was likely not to improve any time soon…and maybe forever. They pointed to Sears and Macy’s as the poster children of the Age of Amazon.

We’re sort of used to pundit paranoia but it is disheartening when honest-to-goodness analysts start acting more like fans than eyebrow raising skeptics who need solid data to be convinced.   Analysts are supposed to be people who get paid to think things through, right?

In the cold light of day — also known as ‘earnings season’ — it seems good news abounds. Take a look at Home Depot, TJ Maxx, Kohl’s, Target, Nordstrom and Walmart, all making shareholders, management and (perhaps most importantly) customers happy.

What this tells us is that while the face of retail is evolving, the really important thing is that consumers are having more money to spend and they sense that our economy is strong enough to give them the confidence to actually buy stuff.

Sure, Amazon is continuing to grow but this is largely just due to the on-going consumer shift to digital sales and other e-commerce related functions. What is now different is that a lot of the old guard companies are learning how to play in the new multi-channel game. For example, Walmart’s on-line business is expected to grow this year by 40%, such as they did in Q2.

Of course not everything is rosy. Is it ever? Things are still not looking too good for Sears who became famous for selling everything and delivering it to your home. Amazon figured out how to be today’s Sears. Too bad that Sears failed to do the same figuring. As E. E. Cummings once said; ‘they did not stop to think, they died instead.’  (Technically speaking, Sears is not dead but its shares are selling at about a buck.)

It is becoming increasingly clear, to both pundits and analysts, that while Amazon may be a juggernaut it is not going to eat everybody’s lunch after all. Customers will always pursue value and companies with good management will seek ways to provide it.

Market Minute – Portfolio Envy?

This week (and so far, today) we have seen several market indexes* reach and breach all-time records. Depending on which pundit you may have happened to read / heard earlier this morning, the new high records mean it is now time to:

  1. Take your gains and get out of the markets. Or
  2. Expect the market gains to continue straight on up. Or
  3. Expect gains in some market you do not own.

I’ve seen all three of these comments today. So, here’s a bit of thought for you. First of all, markets (free markets) always work on the laws of supply and demand: As long as some groups of investors want to own shares of (for example) Apple more than the people who currently own it, the price will rise. This excess of demand may cause shares of Apple stock to rise faster than some larger index. And the inverse is also true – a lack of demand for shares is likely to cause a decrease in share value. It’s also a fact that one part of the market, say Technology stocks may rise at a faster or slower rate than another part of the markets, say Consumer Staples. That has been the case this year as Tech is a big winner and Consumer Staples has been substantially less good. 

Also, one group of like-sized companies will likely outperform another group of differently sized companies over any selected time period. This year Smallcap growth companies have gained about twice as much as the S&P Index which is made up of Largecap core companies. (It is not called the S&P 500 for nothing.)

Or stocks have gone up and bonds have gone down – over some period.

It’s always going to be possible to find some index, sector, or part of the world that is doing better or worse than the areas you have chosen) or we have chosen) to invest in. Think of it this way. You’ve heard that ‘the other lane of traffic moves faster’. Or so it seems. Your individual results will always depend on which parts of which markets you personally own. And that’s what makes investing such an interesting profession.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw(at)denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

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