March Monthly Market Commentary
Denim, jets, weed…and witches? That’s just the start.
The first quarter of 2019 is behind us, and last month was particularly interesting. Don’t have time to read financial papers end-to-end every day? Have a life and other responsibilities and stuff? We got you—here are six things to note as you make your next market move.
Levi Strauss’ IPO
A wise man who runs Berkshire Hathaway once said, “Only buy stock in companies you understand.” Well, the country’s oldest jeans company had their initial public offering, and people who wear jeans spoke loud and clear—146 years after their first patent in 1873:
• Shares climbed 31% (huge !) on IPO day
• Offering price was $17, higher than originally planned due to high demand
• This is not Levi’s first rodeo when it comes to the market—they were publicly traded from 1971 to1984, then taken private again
What to consider: While it may be tempting to jump into the latest IPOs, investors should make sure they’re happy about the price they’re paying for the company and not just excited about the company itself. Investing in companies you know and love can be a good strategy if you take time to understand the businesses. Other IPOs are happening, for example, Lyft . Since it’s a familiar consumer brand you may want to keep an eye on that one, too.
Ok, we’ve all heard of the witching hour—not so great for parents of young children. But in March, the market had a quadruple witching. You heard it. It’s a real term. Here’s the deal:
• Derivatives, like options for example, have expiration dates, and there tends to be more market activity around these times as investors adjust their positions accordingly
• “Witching” happens when multiple types of equity derivative contracts expire at the same time
• The quadruple witching was caused by stock index futures, stock index options, stock options, & single stock futures expiring all on the same day, on March 19, 2019
• This event led to the largest trading day of the year so far
What to consider: Witchings are most pertinent to investors managing millions, so no need to mark your calendar unless you’re that financially fortunate. Quadruple witchings happen on the third Friday of March, June, September, and December, and can have an effect on trading days. Lesser witchings (double, triple) happen more often. Something to keep in the back pocket of your cloak.
Hot Sector: (Driverless) Cars
Driverless cars have been in the news of late. Here’s the scoop:
• Tesla is suing a Chinese rival for snatching proprietary technology
• Ford announced this month that their first driverless cars will be completed in 2021 , built in their Michigan plant
• NIO, a Chinese car company was on 60 Minutes recently ; their stock rocketed up 60%, but then came crashing down 40% soon after
What to consider: With more competition, especially from big markets like China, we can expect this sector to stay in the news. Emerging technologies have the potential to be revolutionary and change the course of history, but investors should be prepared for a bumpy ride.
Hot Sector: Cannabis
Weed is so hot right now, it’s burnin up! As legalization of medical and recreational marijuana is spreading across the United States, the market is capitalizing on this growth industry, making not only stocks but ETFs available as it becomes more mainstream.
• In the 2018 midterms, more traditional states such as Utah, Missouri, and Michigan voted to legalize it in different forms.
• Our neighbor Canada legalized cannabis in October 2018
What to consider: Investors should use some common sense caution in this new sector. There’s also some concern about Federal regulations and laws that could come down the pike, as well as what may come with a new Attorney General. Additionally, while we saw a great proliferation of companies recently, 2019 may be when cannabis companies with the best execution of their business chops take the lead, separating revenue-driving weed from the chaff. (Had to, sorry.)
Watch Out Sector: Airlines
Recently two of Boeing’s 737 Max crashed, one in Ethiopia and one into the ocean off of Indonesia. Another one had to make an emergency landing in Florida. The US along with most of the developed world grounded 737 Max planes to conduct an investigation. This story is still developing but the news has impacted Boeing along with many major airlines.
• Boeing stocks dropped down to $362 on March 22, after reaching a 5 year high of $440 on March 1, 2019
• Boeing is trying to recoup its reputation quickly, rolling out software upgrades and training with great haste
• Meanwhile, rival manufacturer Airbus just landed a huge deal with China
What to consider: While Boeing stocks have dropped recently, it doesn’t necessarily mean they’ve hit rock bottom. There’s an old adage that goes, “don’t try to catch a falling knife,” meaning just because it’s gone down in value doesn’t mean it’s time to “buy low” because it could still be dropping. For example, there may be further investigations from the FAA and others—the story is still developing. It’s also a good reason investors should make sure their portfolios are diverse. Are yours? Check here.
Fed Rates News
Ahh, Fed Rates… everyone’s favorite romantic conversation topic. Here’s the latest:
• Rates don’t appear to be rising anytime soon as the Fed indicated it was hitting the pause button for the rest of the year
• This could be viewed as a good thing because mortgage rates and the price of credit can chill
• It could also be possible that the Fed is pausing because they’re unsure about the economy’s path forward
What to consider: Investors generally like low interest rates because it makes access to credit easier for folks who need it to grow their businesses, or for families who need it to purchase homes. However, given that the Fed just three months ago called for two rate hikes in 2019 and now we’re headed for zero, investors may have been wondering what got the Fed spooked. Like eating broccoli, reading up on Fed policy may be not be super appealing, but it’s a healthy part of any financial diet.
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The opinions, commentary and analysis expressed here are those of Gladie Helzberg as of April 2, 2019 and are for informational purposes only. Views may change as market, economic, and other conditions change. This information isn’t financial advice. Investment decisions should always be based on specific financial needs, goals and risk appetites.
The information provided is not meant to provide investment, tax or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory and automated services offered through SoFi Wealth LLC. An SEC registered investment advisor. SoFi Securities LLC, member FINRA / SIPC .