Bull, Bear, or Duck (?) market - what to know about the stock market right now

You may have heard of Bull markets & Bear markets - what about 'Duck' markets? What's the impact of artificial intelligence, interest rate fluctuation
& the debt ceiling on your investment portfolio? And what could you do about it? Join us on SPi for a quick chat!

June 20, 2023

Transcript

 2023 and I hope everybody out there had a fantastic Father's Day. You know, fun fact, I had to look this up this morning cuz I was like, well, what, what, what interesting bit of knowledge Can I drop on you before I get the, more substantive, heavier bit of knowledge for you. But Father's Day was conceived more than a century ago by Sonora Dodd and dod,  in Spokane, Washington wanted to have a holiday to commemorate her father, William Smart, who was a widowed.

Civil War veteran who was left to raise his six children on a farm. So, she did that and it was, it's actually been celebrated only since 1972. Officially, if you will, annually when President Nixon signed a public law. Making it permanent Father's Day for me was fantastic. Obviously, I, I am, I shouldn't say obviously, but I am, blessed with, with a, with amazing family and just, did some things to get outta my comfort zone.

So if you're not connected with me on Facebook, with me on Facebook, so you'll see some of this sort of, None Neel esque things that I did, but it was actually a lot of fun. So that being said, a couple other things sort of happened last week. Bull market, bear market, duck market. What are we talking about here?

So if you didn't notice, we are in a bull market, especially with the s and p, I shouldn't say especially, but with the s and p 500. Oh wait, hold up. I forgot I was a lawyer for a second. This is not legal advice. This is not financial advice. This is not tax advice. This is not marital advice. It's not cooking advice, it's not fitness advice.

It's just for information and entertainment purposes Only caveat there, in case you didn't know I was a lawyer, now you're reminded again that I'm a lawyer, but the stock market has made some incredible strides. So if you remember last year, especially closing out to the third quarter, I'd say right before, like in the middle of the third quarter, Things were not looking so good.

But if you trace the market since then,  the s and p 500 has actually done pretty well. Now, if you, if you had listened to the pundits back then, you would've thought the sky was falling, and we're gonna come back to that in a little bit as to what you actually do about this. So, when we think about a bear market, Let's talk about a bear market, which might have been what we were entering before we actually got into that window.

So a bear market basically is when stock prices pun it, it's when investor confidence starts taking a hit. There's this wave of pessimism, it engulfs the market. And that is really my friends, what we call a bear market. But if we are thinking about a, well, actually let's just say that what happens is that significant decline happens in the bear market.

People start selling off when they're, you know, they sell at losses. All these economic indicators that like big unemployment rates and reduced consumer spending and yada, yada yada, all that stuff basically makes people kind of gravitates towards safe havens. And we also have rising interest rates. So a lot of people were kind of moving towards that.

Not a good thing, not a bad thing. It's just a thing that happens. People start seeking refuge in things like bonds and golds and cash equivalents, so that's what happens in typically a bear market. So then what's a bull market? You might have heard of bulls, right? So what's a bull market? Yeah. Picture this market filled with optimism and rising stock prices and a sunny day in a flourishing field.

Well, that's kind of what's happening with a, with a bull market. Usually what happens during a bull market, there's this period of increasing stock prices and there's heightened investor confidence and a lot of buying activity. And, and guess what? We, we basically have gotten into this bull market territory, and a lot of it's been fueled by this incredible growth.

And interest in things like Nvidia, Google, meta Apple, specifically the companies that have gotten involved with artificial intelligence, ai and they've been really leading the charge and they've been running the market to, to new heights. So that's kind of what we're looking at. But what's a duck market?

Hmm. A lot of us have heard of bull markets. A lot of us have not necessarily heard of these duck markets. So if you can kind of imagine a duck sitting on the surface of the water, That duck is just kind of chilling out. Looks all calm, but what's happening underneath the surface is a duck is. Paddling furiously using its webbed feet to kind of get to one direction to the other itself.

That is what Kevin Gordon, senior Investment strategist at Charles Schwab calls a duck market. It means stocks look nice and calm on the surface, but there's a lot of paddling going on below. And what are we talking about? Well, look, right now the s and p 500, it's weighted by a lot of market value. It's by top heavy stocks, mostly like these big tech companies.

Like I said, the ones that are actually really,  being pushed a little bit or being motivated or growing as a result of this, this push towards  artificial intelligence. So even though a lot of other stocks might be struggling, you see a little bit of a push there too. So there's this exuberance around artificial intelligence and then the US dollars, had a little bit of a resurgence lately, so you'll see that it's actually having an impact.

Does that mean that we should be all sort of euphoric and start running there? Well, we don't know yet. I mean, there's certainly some opportunities, right? So in, in last month in May, Congress, passed the debt ceiling deal. And then we had the blowout quarter from, Nvidia that pushed a lot of these caps through.

And then the s and p 500 enters these, this bull market, coming off of this 20% gain over 20% since last October. So all this sort of stuff means, okay. Yeah, the indices indicate that were, well, but maybe your portfolio doesn't have that same thing because your portfolio is not the index. It's not the s and p 500.

But what we are seeing is that the market depth is improving as of recently. And the s and p five hundreds, rally, it has started broadening from just tech stocks to some of the market, more other market, sectors as well, like industrial, materials and financial sectors. So here's the thing.

Whether we're in a bull market, whether we're in a bear market, whether we're in a duck market, or a fool's market, any of that sort of stuff, you've gotta stay in your lane. What's important for you is what's important for you. So despite we have this, as having this sort of rally, what we've got is opportunities here.

So you might have things that are down. And you might have been holding onto them, and it may be time to consider rebalancing. This might be a good opportunity to diversify. I'm not saying we chase it. Like I'm almost imagining like, you know, my kids were, in soccer, very, very early on before they understood the idea of staying in positions and, and kind of doing all those things.

They would all sort of hive. Towards the ball, right? So you see the ball and then you see all this group of like, you know, seven kids just running towards the ball, and then the ball goes that way and they all run towards the ball itself. That's not what we wanna do. Obviously we wanna be more strategic about that.

We wanna make sure that we've got, we're in our positions and we're, we're maintaining our positions and are in a good way. We're rebalancing those positions when it makes sense to rebalance those positions. This might be an opportunity to do that. This might be an opportunity to do it with a tax efficient way of, of, of sort of diversifying out there too.

So whether we're in that bull market now, also, I will say the Federal Reserve has, indicated that they're going to skip interest rates, hikes right now, but, They are expecting a couple more to come. So we've got a lot of things that we can possibly be doing within our own control. We don't necessarily wanna stress about the stuff that's outside of our control, but it's good to know what's happening in the market because you do have opportunities, especially like I said, with taxes, with rebalancing and just revisiting that financial plan.

Good to have, this sort of cocktail conversation. It came up over the weekend, the bull market, the bear market, the duck market. But regardless of where we are, Know what your financial goals are, know what your investment plan is doing for those financial goals, and then be tax efficient. And then of course, make sure that your legacy plan is is in place as well too.

And of course, if you need any help with that, you know where to find us. I'm Neel Shah with Shah Plan-it. I'm looking forward to seeing you next week. Stay safe, stay healthy.