Teeter Tottering

“I look like I’m stable, like nothing can move me, I look like I’m steady, like nothing will shake me.
I’m unable to balance, my emotions and all, As I sit alone on this teeter totter”
– Vishal Duti “Teeter Totter”


Our fellow citizens celebrated August’s 2.98% rise in the S&P 500, the seventh consecutive month of positive returns, by expressing their wish to go short the US economy. CNBC, reporting on the preliminary August reading on Consumer Sentiment, headlined their August 13th story “Consumer sentiment measure falls to pandemic-era low, sees one of largest drops on record”. Adding a bit of fuel to that particular fire, ADP’s August report on employment disclosed that 374k private sector jobs were created, a significant shortfall from the 626k expected.

Certainly all the roads we have been and will be traveling upon will not be straight and so we may not be heading to Rome but perhaps they do lead us to an economy preparing to greet us with a great deal more light than shadow. The scanning of a day’s headlines on the economy from Bloomberg are interesting. “Turkey Rebounds From Virus Contraction With Record Growth”. “Chile Central Bank Hints at Overheating, Cuts Back Stimulus”. “The Global Economy Is Shrugging Off the Delta Variant, For Now”.  In analyzing the current state of our national economy it may be helpful to take an extra step or two back and exercise our gift of perspective. Quite possibly our economic future will be a great deal better than many expect it to be and likely a great deal better than it has been the past eighteen months.  

For many investors, observing the headline indices like the S&P, the market, while profitable, would seem to be lacking in significant entertainment value. Some may see this as a “watching paint dry” market but if one looks at it a good deal more carefully it is also possible to observe the wry smile of the Mona Lisa. Forgive the mixing of metaphors, but this year’s market has been actually the tale of two markets. 

At 7:30 am Wednesday, May 12th, the Federal Reserve reported the Consumer Price Index increase for April. It was a big number and larger than the one expected. The market had already started to decline that Monday and from that day’s open to Wednesday’s low the S&P declined by 4%. By June 1st the market had fully recovered from that modest pull back but the market after May 12th is one that is dramatically different than the one prior to that date. Year to date as of May 11th the S&P 500 was +10.8% but the Value stocks were +16% and the Growth stocks +6% with Small Cap stocks narrowly outperforming the S&P at +11.5%. Energy stocks were +38% and Technology +3.9%. Since May 12th through August 31st its been a record played in reverse. The S&P is up an additional 11.4% but Growth is +19.1% and Value +3.4%. Energy stocks are -6.5% and Technology stocks are +20.1% with Small Cap stocks up less than half that of the S&P +6.6%. Interesting. Truly it has been a market where it’s been better to be content with just being in the pool as opposed to hazarding a guess as to which side its preferable to inhabit.

As mentioned above, its been seven consecutive positive months in a row for this market. If you are thinking of records, the S&P accomplished the feat of eight consecutive months in 2017 as well as 2007. For August the equity side of investor’s portfolios returned 2.5%. The Growth side of the S&P was +4.15% and Value +1.7%. Small Cap stocks returned 2.2% and Foreign Developed markets continued their performance gap vis a vis US stocks returning 1.45%. With the approximate .50% return on the fixed income share of the portfolio the 60 equity 40 fixed income and cash portfolio returned 1.60% for the month and has returned 12% for the year to date.


Mark H. Tekamp | September 1, 2021