Most of our Posts are a work in progress for 3-5 business days prior (at least, many take months) till the actual post. We started our theme of Too fast of a Pace way before the Capital Markets started pulling back the reins. We left the title on this post as an odd coincidence of good timing!
One quick note before we start.
Points Versus Percentage
It has been a LOONG time since we have had a meaningful pause in the capital markets.
While we watch all indexes but not the Dow Jones as much, we do understand that this index is one of the most watched. “The Market” in most circles means the Dow Jones .. such the reminder.
As the Dow Jones Index has risen over the last few years, a percentage move has become a greater number of Points.
Today a 2% move is around 500 Dow Points. At the lows of the great recession of 07-09 a 500 point move would have been near an 8% move … just a friendly reminder to keep things in perspective.
Whoa Baby Whoa
Don’t get us wrong, we like growth, but just like starting a long distance race too fast, this year started too fast … proving even too much of a good thing, is still too much !
The first white trend line is a high double digit (~20%) annual growth line … unsustainable in itself over a longer period. The second “Super Aggressive is an approximate 40% annual rate, only to be out done by the third trend line which is over a 60% annual clip. This last line is 3x an aggressive pace … clearly unsustainable!
It would not surprise us to rest a while … a much needed rest that is.
Oh, we have plenty of excuses (rates, hot economic numbers, Fed Reserve talk) but we think the unsustainable pace was the key
Have a Great “Paced” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth