Behind the Numbers With Brad McMillan. Chief Investment Officer, Commonwealth Financial Network,
Oct. 10 was a bad day in the market. The Dow was down more than 800 points (800 points!), and the S&P
was down almost 100 points (100 points!). Surely, this is the beginning of the end. Maybe so. But if you
turn those drops into percentage terms, of just more than 3%, they don’t look nearly as scary. I’ll grant you,
declines of 3% in one day can rattle markets. Historically, however, they happen every three to six months.
We saw an even bigger drop in January and February (remember that?) and another one in March.
As I have said multiple times, I start to pay attention when the market cracks its 200-day moving aver-
age. We got very close to doing that on Oct. 10, for the first time since April of this year and since June 2016
before that. This break of a long-term trend line is definitely something worth noting. It doesn’t happen that
often, and it can be a sign of more trouble ahead. We are not there yet. But the fact that we are that close, and could easily break it
from here, means we should pay attention.
—Brad McMillan, "A Bad Day in the Market: Is It a False Alarm?"
ECONOMIC AND FINANCIAL MARKET FORECAST
Below is a comparison of current economic and financial data with the panel’s
composite forecast for the next six months. (Through May 2019)
Current Level1 Strategists’ Predictions
STOCK MARKET 25,340 25,596
(Dow Jones Industrials)
BOND MARKET 3.2% 3.2%
(10-Year Treasury Note)
ECONOMIC GROWTH 4.2% 2.9%
(Annual Growth of Real GDP)
INFLATION 2.3% 2.4%
(Annual Increase in CPI)
SHORT-TERM RATES 2.8% 2.5%
(Three-Month Treasury Bills)
( 1) As of 10/8/18
FOR A BALANCED PORTFOLIO
The statistics below are a composite of results from our monthly poll of leading
portfolio strategists and are designed for a balanced growth investor.
STOCKS BONDS CASH
52.2% 32.0% 15.8%
12-MONTH TRENDS IN
LOW HIGH CURRENT
STOCKS 52.2% 61.0% 52.2%
BONDS 26.8% 32.0% 30.0%
CASH 10.8% 18.3% 17.8%
RANGE OF CURRENT
STOCKS 10% 70%
BONDS 20% 40%
CASH 1% 50%
CHANGE FROM PRIOR
STOCKS BONDS CASH
0% 0% 0%
Portfolio strategists polled 10/8/18 - 10/12/18
A. Gary Shilling & Co.
Dudack Research Group
CASH HOLDINGS BELOW PANEL AVERAGE
Commonwealth Financial Network