Keystone Financial Group

The Market’s Dual Nature

 

The Market’s Dual Nature

Let’s begin with an intriguing phenomenon that has gripped the financial realm: market bifurcation. It’s a topic that warrants our attention as we address recession fears. Picture this – the S&P 500, a collection of 500 diverse companies, yet a mere 8 “mega-cap” stocks hold a collective value exceeding eleven trillion dollars. These tech giants have propelled the Nasdaq to heights not seen since 19831.

This meteoric rise, reminiscent of the dot-com bubble, raises a pertinent question: Are we on the brink of another market correction? History teaches us that rapid ascents are often followed by precipitous falls. After the dot-com bubble burst, it took the Nasdaq an entire decade to recover1.

In my opinion investors, especially those who entrust their funds to passively managed ETFs, should exercise vigilance. These 8 mega-cap stocks wield substantial influence, and a market correction could be detrimental.

Lingering Recession Fears

Now, let’s address the elephant in the room – the looming threat of a recession. It’s a topic that has been circulating for some time. Every day that we manage to avoid a recession brings us closer to the elusive “soft landing” the Federal Reserve seeks. However, history reminds us that this is a challenging feat for the Fed, which raises recession fears.

Adding to the anxiety, Fitch, a renowned credit rating agency, recently downgraded US treasuries – only the second time in history2. This downgrade underscores concerns about the US’s ability to meet its financial commitments, with fiscal irresponsibility and political discord cited as contributing factors.

We must also scrutinize disposable income and wage growth. Although wages are finally outpacing inflation, the rate of wage growth has been dwindling for some time. Coupled with record-high credit card debt and impending student loan payments, this paints a precarious picture for American consumers. A recession may still lurk in the shadows, especially considering the burdens many Americans bear3.

The Rising Tide of Interest Rates

Lastly, we turn our attention to interest rates, an ever-persistent concern that contributes to recession fears. While predicting interest rates with certainty is futile, available data suggests they are unlikely to decrease in the near future. The Federal Reserve’s unwavering commitment to combating inflation means more rate hikes and further tightening of the money supply and risk of recession are expected.

I, for one, am concerned about the potential impact on consumers’ budgets and corporate revenues. As interest rates rise, debt repayment takes precedence, potentially affecting corporate profitability and further confirming recession fears.

In conclusion, these are complex times in the financial world. The markets continue to thrive, but warning signs are visible. It’s essential for both investors and consumers to stay vigilant. At Keystone Financial Group, we stand ready to provide the guidance and support needed to navigate these uncertain waters.

Seth J. Edgil and David Guttery offer products and services using the following business names: Keystone Financial

Group– insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC –

securities and investments | Ameritas Advisory Services, LLC (AAS) – investment advisory services. AIC and AAS

are not affiliated with Keystone Financial Group. Information is gathered from sources believed to be reliable;

however, their accuracy cannot be guaranteed. Data provided is for informational purposes only and should not be

construed as a recommendation to purchase or sell any investment product.

Footnotes

1. According to Yahoo Finance, 8 “mega-cap” stocks are worth over eleven trillion dollars combined, while the other 492 companies in the S&P 500 are worth 27.6 trillion dollars (Yardeni Research). The Nasdaq had its best first half of the year since 1983 (CNBC). â†© â†©2

2. Fitch, a renowned credit rating agency, downgraded US treasuries on August 1st, marking only the second time in history (Fitch Ratings). â†©

3. The Department of Labor reports that wages have been growing at a declining rate. Credit card debt in the US recently topped $1 trillion, with an average interest rate of 24.37% (Forbes, LendingTree). â†©

 

 

 

 

Video Content

Things Aren’t Always As They Seem

Since February, the market has absorbed and reacted to many changes to previously made assumptions regarding the prospects for growth, and earnings.  These shocks were geo-political, and geo-economic in nature, and involved the sudden repricing of risk over tariffs, reciprocal tariffs, and the concern that a growth shock induced recession could be on the horizon.  

As of the middle of May however, we can quantify how those fears have seemingly abated, and markets have re-priced for that risk in a positive manner, underscoring once again the need to be stoic in your disposition when it comes to the allocation of an objective driven investment initiative.

Sometimes, things aren’t always as they seem, and navigating through the noise of sensationalism can feel like walking through a fun house of mirrors.  Within this video, I’m offering my thoughts on the reasons behind what turned out to be the sharpest and fastest draw down that we’ve experienced in 100 years, and furthermore, why did markets recover from that drawdown so quickly as well.  Were the concerns rational, or irrational?

From a tactical perspective, we remain dedicated to the goal of insulating ourselves from the sensationalism and hyperbole of the day, as we dispassionately adjust the exposures within our models, and act upon data driven conviction.

Please find a few minutes to view our monthly commentary, and please let us know if we can be of service.

Things Aren’t Always As They Seem

Since February, the market has absorbed and reacted to many changes to previously made assumptions regarding the prospects for growth, and earnings. These shocks were geo-political, and geo-economic in nature, and involved the sudden repricing of risk over tariffs, reciprocal tariffs, and the concern that a growth shock induced recession could be on the horizon.

As of the middle of May however, we can quantify how those fears have seemingly abated, and markets have re-priced for that risk in a positive manner, underscoring once again the need to be stoic in your disposition when it comes to the allocation of an objective driven investment initiative.

Sometimes, things aren’t always as they seem, and navigating through the noise of sensationalism can feel like walking through a fun house of mirrors. Within this video, I’m offering my thoughts on the reasons behind what turned out to be the sharpest and fastest draw down that we’ve experienced in 100 years, and furthermore, why did markets recover from that drawdown so quickly as well. Were the concerns rational, or irrational?

From a tactical perspective, we remain dedicated to the goal of insulating ourselves from the sensationalism and hyperbole of the day, as we dispassionately adjust the exposures within our models, and act upon data driven conviction.

Please find a few minutes to view our monthly commentary, and please let us know if we can be of service.

YouTube Video VVVkd3dBLXV6ZGNYTXZGVmoxNUlwOHp3LkNZTTZNR1dfQzVr
Keystone Financial Group 39

Things Arent Always As They Seem 2025 KFG 2

Keystone Financial Group May 17, 2025 2:46 pm

Things Aren’t Always As They Seem

Since February, the market has absorbed and reacted to many changes to previously made assumptions regarding the prospects for growth, and earnings.  These shocks were geo-political, and geo-economic in nature, and involved the sudden repricing of risk over tariffs, reciprocal tariffs, and the concern that a growth shock induced recession could be on the horizon.  

As of the middle of May however, we can quantify how those fears have seemingly abated, and markets have re-priced for that risk in a positive manner, underscoring once again the need to be stoic in your disposition when it comes to the allocation of an objective driven investment initiative.

Sometimes, things aren’t always as they seem, and navigating through the noise of sensationalism can feel like walking through a fun house of mirrors.  Within this video, I’m offering my thoughts on the reasons behind what turned out to be the sharpest and fastest draw down that we’ve experienced in 100 years, and furthermore, why did markets recover from that drawdown so quickly as well.  Were the concerns rational, or irrational?

From a tactical perspective, we remain dedicated to the goal of insulating ourselves from the sensationalism and hyperbole of the day, as we dispassionately adjust the exposures within our models, and act upon data driven conviction.

Please find a few minutes to view our monthly commentary, and please let us know if we can be of service.

Things Aren’t Always As They Seem

Since February, the market has absorbed and reacted to many changes to previously made assumptions regarding the prospects for growth, and earnings. These shocks were geo-political, and geo-economic in nature, and involved the sudden repricing of risk over tariffs, reciprocal tariffs, and the concern that a growth shock induced recession could be on the horizon.

As of the middle of May however, we can quantify how those fears have seemingly abated, and markets have re-priced for that risk in a positive manner, underscoring once again the need to be stoic in your disposition when it comes to the allocation of an objective driven investment initiative.

Sometimes, things aren’t always as they seem, and navigating through the noise of sensationalism can feel like walking through a fun house of mirrors. Within this video, I’m offering my thoughts on the reasons behind what turned out to be the sharpest and fastest draw down that we’ve experienced in 100 years, and furthermore, why did markets recover from that drawdown so quickly as well. Were the concerns rational, or irrational?

From a tactical perspective, we remain dedicated to the goal of insulating ourselves from the sensationalism and hyperbole of the day, as we dispassionately adjust the exposures within our models, and act upon data driven conviction.

Please find a few minutes to view our monthly commentary, and please let us know if we can be of service.

YouTube Video VVVkd3dBLXV6ZGNYTXZGVmoxNUlwOHp3LmcyMkNlNjVUUWhV

Things Arent Always As They Seem 2025 IFA 1

Keystone Financial Group May 17, 2025 2:38 pm

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