Market Insights - November 11th, 2019
Emotions can run rampant in financial decisions. We talk a little about both fear and greed and how those two emotions can grab a hold of you and drive poor decisions in your investment decisions.
Download the transcription here:
Rick: Good morning. Welcome to the week in review for November 11th 2019. Joining me this morning is the cofounder and president of Southwest Investments, Bart Schannep. Bart, why don’t you get us started?
Bart: Sure. When it comes to emotions, people have a rainbow of emotions, right? We have love. We have jealousy. We have fear. We have respect. We have all kinds of emotions, but when it comes to money, it quickly boils down to just two, fear and greed. People don’t like to say fear and greed, so we have new terms, kind of a politically correct way of saying it now. We say risk-on, risk-off.
You may have read those terms in publications such as the Wall Street Journal or heard talking heads on TV talking about it. What it essentially means is at times, either fear leads the pack or greed leads the pack. We saw last week a very fundamental rotation to greed or risk-on.
My evidence for that is we saw the indexes hit all-time new highs, which of course means more buyers and sellers. We also saw rotation out of bonds. You may have noticed interest rates rose last week. Interest rates rose not because the government had any influence on it. It’s because investors in general sold more bonds than bought them.
Investors also rotated out of high-dividend-paying stocks like publicly traded REITs, real estate investment trusts or utility stocks and towards non-dividend or low-paying dividend stocks that are more growth oriented. Investors clearly see that there’s a lot more growth opportunity out there. That’s leading the risk-on.
Rick: In other words, Bart, this bull market still has legs.
Rick: Thanks again Bart. I appreciate you taking the time this morning. Thank you all for joining us. Remember to like us on Facebook and Twitter where we have miscellaneous posts throughout the week. We look forward to seeing you next week.