With The Final Four and The Masters here in Georgia and only a week apart there has been no shortage of excitement for sports fans here.
Speaking of excitement, this week the markets have provided it in spades. The Dow Jones dropped 265 points on Monday, rallied 157 points on Tuesday and then fell 138 points on Wednesday. Commodities have had an even tougher time with Silver falling by over 12% on Monday alone, while Gold fell 8.7%. As I said in my last update, the first quarter of 2013 was very similar to the first quarter in 2012 with the stock market rallying while experiencing very little volatility. But April was a turning point in 2012 and in previous years with market volatility increasing and stocks falling. We are certainly keeping a close eye on recent developments to see if the volatility experienced this week continues or is just a blip in the market’s march higher.
The Wall Street Journal posted an article that addresses the recent decline in Gold, while also pointing out that the unprecedented amount of financial stimulus by governments across the globe is currently the single biggest driver of the markets. We agree with this conclusion and I encourage you to check out this short article.
From the Wall Street Journal:
“Investing in a Fed-supported market is difficult, and so far, thoughtful investors may have over-thought things. They have underestimated the Fed’s power.
That leaves investors with two things to watch for: serious, nearby economic problems or an end to Fed support. Neither seems to happening yet. Although the world economy still is not able to function without massive government aid, it is getting plenty of that and is not currently in a crisis. That may be the single most important fact about financial markets now.”