Thursday, 27 August 2015

What a week

Volatility is back. Stocks corrected for the first time in a number of years. The volatility caused so much concern that the CEO of Starbucks Howard Schultz sent out a memo to employees telling them to be extra nice to customers.

"Our customers are likely to experience an increased level of anxiety and concern. Please recognise this and as you always have remember that our success is not an entitlement but something we need to earn, every day". Howard Schultz.

Starbucks stock itself fell 20% before recovering to end slightly down. Maybe a free cup of coffee to shareholders might have calmed the nerves!

The past week has been interesting with some large moves in stocks but if you hadn't looked you wouldn't have known what happened as they snapped back just as quickly. GE the only original surviving member of the S&P500 plunged over 20% intraday before recovering to end down only 3%. We don't own GE but it's now yielding nearly 4% twice the rate you get from lending to the US government for ten years.

Volatility can be a friend or worst enemy it's really up to you. A lot of of the information in the market is noise, it isn't necessarily helpful or useful. What has changed is the fact that China is slowing more than expected. At Decisive we have added to or bought positions in stocks that have very little to do with China. Facebook for example isn't even allowed to operate there. As the dust settles down we can focus on the positives. Oil at $40 is great for the consumer it's a massive tax cut for the global economy, there is very little inflation keeping interest rates low and the US housing market remains strong.

Jason


Decisive has a long position in Starbucks (SBUX) and Facebook (FB).The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.