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Investment Perspectives

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Investment Perspectives is a monthly publication which provides our market outlook as well as insight into the state of the economy.

IP-Header.JPGThis month’s issue features the following topics:

“Corrections are Normal and Customary" by Mark Luschini

More than a year has passed since the stock market experienced a decline of 5% or more. That hasn’t happened since the 1990s! Being due for a pullback, however, doesn’t help date its occurrence, and preparing for the inevitable is prudent—particularly since equity markets tend to exhibit a pattern that mathematicians call “negative skew.” Allow me to explain. History is replete with examples of extended periods during which the stock market trends higher more often than lower for weeks at a time, and, yet, the best weekly return generated during that time frame is far less than the worst weekly return—or more colloquially, equity markets walk up the stairs but jump out of the window.

“Revisiting the Secular Stagnation Thesis” by Guy LeBas

It’s been five years since, in these publications and others, Janney’s Investment Strategy Group began discussing the sources and implications of secular stagnation. At the time, the economic phenomenon didn’t have an accepted name, but in 2014, former Treasury Secretary and Harvard President Larry Summers warned about “Secular Stagnation, Hysteresis, and the Zero Lower Bound.” Summers is something of a polarizing figure, but even his political critics don’t dispute his economic chops. That speech instantly cemented the term secular stagnation in our collective economic memory, and in the five years since we started writing about the concept and three years since Summers popularized the phrasing, it’s definitely been one of the most powerful economic forces in the world.

“A Sturdy Market" by Greg Drahuschak

As often happens in July, the S&P 500 ended the month with a gain, but one that was notably more than the average for the month. Healthcare topped the July sector results, but technology retained its substantial year-to-date outperformance.

But as August dawned, traders were quick to remember that the month often begins a traditionally weak period that extends through September. On average since 1949, the S&P 500 ends lower in August and September.

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