Thanks to the sharpest sell-off since President Trump’s Nov. 8 election, the U.S. stock markets yesterday closed their worst performance of 2017 this past week.
The Dow Jones pulled back 1.05%, the S&P 500 fell 1.34% and the Nasdaq tumbled 1.13%. In contrast, the MSCI Emerging Markets Index rallied sharply, rising 3.11%.
A handful of your Smart Money Masters‘ holdings bucked the trend. These include PayPal (PYPL), Costco Wholesale (COST) and Kraft-Heinz (KHC), which gained 1.28%, 0.93% and 0.92%, respectively.
Yesterday’s market sell-off marked a watershed for 2017.
That’s because the S&P 500’s streak of 109 days without a 1% decline finally ended.
The good news is that most similar streaks have seen stocks quickly recover.
On average, it only took the S&P 500 about three weeks before recovering to a new high.
The Nasdaq also wiped out a month’s worth of gains in a single day. The Nasdaq also tends to rally over the next two or three weeks each time, gaining an average of more than 2%.
Some additional perspective here is useful.
Even with the sell-off, the S&P 500 is still only a bit more than 2% below its all-time high. And based on experience, the end of such a streak is no cause for any longer-term worry.
In addition, emerging markets are rallying hard, even in the face of worries in the U.S. stock market.
Such a strong performance is highly unusual — and very bullish — for international stocks. It suggests that investors are embracing more risky assets.
No doubt this has not escaped the attention of some of the investment world’s Smart Money Masters.
Finally, a quick note of congratulations to my Harvard Law School classmate and friend Neil Gorsuch. He is performing admirably during his Supreme Court confirmation hearings at the U.S. Senate this week.
You can see a letter of support that I signed along with some of my Harvard Law School classmates by clicking here.
A smaller group of us — Neil’s closer friends from our social club — The Lincoln’s Inn Society — also submitted a private letter of support directly to the U.S. Senate.
Portfolio Update
Costco (COST) announced yesterday that it would launch a delivery service to compete with Amazon. The service initially will launch in Tampa, Florida, and will expand to 50 markets and over 30 million households by the end of 2017.
Sincerely,
Nicholas A. Vardy
