When Markets Behave Like Teenagers

When Markets Behave Like Teenagers

 

Lately, the markets have been acting like a petulant, over-reactionary teenager.  One day it’s full of joy and excitement, and the next day it’s rolling its’ eyes and sending chilling death glares our way.  It doesn’t take much to go from one extreme to another and the mood swings are not always rational.

 

On January 10th the Dow Jones Industrial Average fell nearly 700 points.   Why?  Because the US jobs growth beat expectations, stoking fears of higher inflation and speculations that the Feds may not cut interest rates. (1) 

 

As with a teenager, we can remind ourselves that not every meltdown requires a response.

 

Five days later, on Jan 15th the Dow Jones Industrial Average surged over 700 points. What caused the Mood Ring to go from red to green?  The news reported that Headline Inflation increased 2.9% on a 12-month basis, and lower than the 3.3% estimated forecast. (2) 

 

OK, stock market – was that temper tantrum from the prior week really necessary?

 

Donald Trump takes office this week and our collective emotional spectrum is vast in its’ intensity.  He will bring change and, with that, unpredictability.  I suspect we will see many more markets like those of the first few weeks of the year.

 

So, what are we to do?

 

As with a teenager, I recommend setting clear boundaries, being firm, and not overreacting.  Said another way, when our financial planning needs and our investment portfolios are aligned, then there should be no need to react.

 

Please call us if you want to see if your financial needs and your investments are aligned.

 

Stay the course.
Barbara

 

19 January 2025

 

Out Takes
I’d like to thank all of you who pointed out my error in the “I’m worried About My Insurance” memo last week. The insurance commissioner’s announcement was made on January 10th, not February 10th.  I am grateful you all keep me honest and on my feet.  Please also know that I was not crediting our insurance commissioner for being forward thinking.

 

  1. https://www.reuters.com/markets/us/futures-drop-caution-ahead-key-payrolls-data-2025-01-10/
  2. https://www.cnbc.com/2025/01/14/stock-market-today-live-updates.html

 

 

 

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