In this week's episode of Money Wise, Jeff kicks off the episode by providing a detailed market performance summary. The Dow Jones Industrial Average rose by 287 points (0.7%), while the S&P 500 dropped by 110 points (2%) and the NASDAQ fell by 672 points (3.6%). Year-to-date, the Dow is up 6.9%, the S&P 500 has increased by 15.4%, and the NASDAQ is up 18.1%. The Money Wise guys discussed their cautious outlook due to recent significant run-ups, advising listeners to use a dollar-cost averaging strategy, particularly during historically weaker months like August and September. The market's downturn later in the week was attributed to negative comments from President Biden and former President Trump regarding trade with China and Taiwan.

The conversation also highlights the dominance of a limited number of tech stocks driving much of the market's performance, such as NVIDIA, up 144.5% for the year, and other high performers like Netflix and Broadcom. The guys expressed skepticism about the sustainability of this narrow leadership, suggesting a broader market correction might be imminent. They noted early signs of market rotation, with money moving from large-cap tech stocks into small and mid-cap stocks, potentially broadening the market's performance base. This rotation could help sustain the bull market, provided it continues.

Market seasonality refers to the predictable patterns and trends that occur at specific times of the year in the stock market. These patterns are often influenced by historical data, economic cycles, and investor behaviors. For example, the months of August and September are historically weaker periods for market performance, often experiencing lower returns or increased volatility. Understanding market seasonality is important because it helps investors anticipate potential market fluctuations and adjust their strategies accordingly. By recognizing these seasonal trends, investors can make more informed decisions about when to enter or exit positions, manage risk, and optimize their portfolios for better long-term performance.

In the second hour today, the Money Wise guys give their take on the RIA vs Broker debate. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.