Although the Bloomberg 3000 Value index last week added to its return advantage versus its Growth counterpart since Halloween,…
…the red ink across the board, with many AI-Buildout stocks continuing a second-half-2026 retreat,…
…again reminded that stock prices move in both directions,…
…even as long-term gains have been very good.
Of course, the pullback, while still far more modest than those that regularly occur,…
…came with drama in the credit markets as the federal budget deficit hit $40 trillion, Treasury Secretary Scott Bessent ratcheted up government-debt repurchases,…
…and the yield on the 30-Year U.S. Treasury hit the highest level in nearly two decades,…
…though that benchmark interest rate is still below its long-term average and at least one financial publication added some much-needed perspective,…
…especially as the current 4.73% yield on the 10-Year U.S. Treasury is far below levels of the 1990s,…
…a decade that proved to be very lucrative for equities,…
…which shouldn’t be a big surprise given that stocks have performed fine, ON AVERAGE, whether the 10-Year yield is high or low.
That does not mean that equities are immune to rising rates, but the only thing that can be said for certain is that bonds do not like falling prices (i.e. rising bond yields)!
To be sure, interest rates are not the only issue causing folks to fret these days as the Middle East remains a powder keg,…with U.S. military involvement now in its 37th year,…
…and the tariff skirmishes are heating up anew,…
…as, believe it or not, has been the case, more or less, for a century.
While the long-term trend in stocks is up, as equity prices historically have followed earnings higher,…
…and the outlook for corporate profit growth remains very healthy,…
…with Q2 2026 report cards coming in much better than usual,...
…we must always be braced for additional downside, especially as many Wall Street pros, per the latest Bank of America Fund Manager Survey, are Bullish, though history suggests this contra-indicator is a far more valuable Buy signal than a Sell signal.
Still, we remember that it is often better to be greedy when others are fearful…and fearful when others are greedy, but the folks on Main Street, per the latest read from the American Association of Individual Investors are pessimistic,…
…and there is still plenty of cash parked on the sidelines.
So, we’ll close this missive with a visual reminder that even those with lousy timing in entering the equity market each year have done well over the long-term,…
…provided that they remember that the secret to success in stocks is not to get scared out of them.
