Markets “In a Nutshell” for August 20, 2019

Investment Week at a Glance

Stocks dropped last week. The Dow Jones Industrial average was down 1.5% while the S&P 500 fell 1.0%. The New York Stock Exchange Composite (2,000 stocks) lost 1.3%. The “average investor’s index” (Value Line index) fell 2.0%. Foreign stocks (EAFE index) were down 1.6%. Bond yields dropped (bond prices up) as the 10 year Treasury ended at 1.54%. (Data sources: Barron’s Financial, Wall Street Journal)

Time to Buy Energy Stocks?

Whoa be to energy stocks. That has been the case for some years now as the energy stock sector has been beaten down. In the past 12 months, energy stocks have dropped by 31%. In spite of (or perhaps because of) these dismal returns, Barron’s writer Andrew Bary sees opportunity in energy stocks. Juicy yields and cheap valuations make some of the energy stocks attractive buys. Stocks such as BP Oil (yield 6.8%), Royal Dutch Shell (yield 6.8%), Schlumberger (yield 6.3%) and Valero Energy (yield 4.7%) are all stocks that look attractive.

Is the Gold Rally for Real?

While U.S. stocks in general have had a rough last 4 weeks (Dow Jones Industrial stock average down 5%), gold and gold stocks have risen with gold prices up 5.9% and gold stocks up 6.1%. The question is: is this a harbinger of a cycle of increasing gold and gold stocks or just a short lived rally. Billionaire investor Jeffrey Gundlach has been bullish on gold for some time telling CNBC,” I am certainly long gold.” Gundlach expects the U.S. dollar to weaken which he sees as bullish for gold.

Record Gains Coming for Stocks?

Yardeni Research president Ed Yardeni says investors who are afraid an economic downturn will drive down stock prices will miss out on new record highs. Yardeni sees the outlook for the economy as positive and that should drive stock prices higher. “Usually recessions are caused by credit crunches…I don’t see a credit crunch out there.”

Quiz:

Gold prices passed the $1,500 an ounce price recently, possibly ending an eight year bear market. In August, 2011 gold hit new all time highs. What was the all time high price per ounce?

 

a. $1,656

b. $1,917

c. $ 2,109

d. $2,277.

 

Answer is below.

 

Have a good week!

 

 

 

 

 

Answer to quiz:    b.