Weekly Reading Recommendations

7 Mistakes Investors Makes & How to Avoid Them (Fidelity)

Where Inflation has hit Americans Hardest (Pew Research)

No Signs of Recession Here, U.S. Economy Grew 3.0% in the 2nd Quarter (Statista)

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This Week's Highlight Article

Songs of Experience: Reminiscences of a Strategist

In “Songs of Experience: Reminiscences of a Strategist,” Liz Ann Sonders reflects on her 38-year journey on Wall Street, sharing invaluable lessons learned from legendary investors. She recounts her early days working with Marty Zweig and the timeless wisdom imparted by icons like Sir John Templeton. Sonders emphasizes the enduring relevance of market psychology, quoting Templeton’s famous adage: “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

 This week's highlight article is a treasure trove of insights for anyone interested in understanding the emotional underpinnings of market behavior and the timeless strategies that have guided successful investors. 

 We'll leave you with a quote, pulled from Reminiscences of a Stock Operator published in 1923, that is just as relevant today as it was a century ago:

 "Speculators buy the trend; investors are in for the long haul; 'they are a different breed of cats.' One reason that people lose money today is that they have lost sight of this distinction; they profess to have the long term in mind and yet cannot resist following where the hot money has led."

 Click Here to Read, "Songs of Experience: Reminiscences of a Strategist" (Schwab)

Charts that matter

September is Historically a Volatile Month

While just a few days into September, it might be living up to its reputation as a historically bad month for stocks. Since 1990, September has been the worst month of the year for the stock market and the only month that has averaged a negative return of more than -0.5%.

 Interestingly, the August/September instability in equities may set the stage for stability in the following months. Since 1990, the period from October through December has consistently been the strongest period for stock performance with average monthly returns of +1.7% (+20.1% annualized). Equity volatility typically peaks around late September and drifts lower in the fourth quarter. 

 What to make of this? Enjoy the rest of summer, but keep in mind that September can be a turbulent month. But do not fret as the turbulence is usually short-lived. Investors must see through these bouts of volatility to earn the premium returns stocks have historically delivered. 

If we equal-weight indexes by giving each constituent company the same percentage regardless of size, it becomes obvious how much a few giant US companies are changing perceptions. What comes as a surprise to many is that on an equal-weighted basis, the total return on MSCI’s index for Europe has actually outperformed its US Index since the beginning of 2023. 

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