The sad truth is that your brain is hard-wired to make you your own worst enemy in the stock market. To study why investors are too quick to sell, Frydman had subjects trade stocks in a functional magnetic resonance imaging (fMRI) machine. With the prospects of bullish tax reforms and infrastructure spending in Washington, D.C. fading and valuations so rich, many market pundits say you should sell stocks ahead of further declines. If a stock you sell then declines, you may well buy it back. Michael Brush is a Manhattan-based financial writer who publishes the stock newsletter Brush Up on Stocks.
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It's important to note that during that period, the stock market was being underpinned by unprecedented monetary stimulus from the Federal Reserve that made it extremely cheap to borrow money. While corporate profit expansion certainly boosts share appreciation, the US stock market showed the ability to recover even when mired in a five-quarter contraction from 2015 to 2016. It marks the third straight quarter of earnings growth for the S&P 500. "If you're a long-term investor, and fundamentals haven't really changed to the negative, there's no reason to panic," said Sichel. "But the underpinning of good, strong corporate earnings still makes stocks a good place to be — as long as you can put up with some increased volatility."
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Why the stock market will be fine if Trump's tax cuts don't happen — in one chart
RBCThis state of affairs suggests the stock market DJIA, +0.43% will be OK if tax cuts and other Trump plans don't become reality, according to Golub and his colleagues. The market is expecting "very little in the way of policy changes, making stocks less vulnerable if they don't occur," the RBC strategists wrote. The S&P 500 and Dow industrials have lost ground for two straight weeks, with analysts tying the retreat to doubts about whether President Donald Trump's business-friendly policies will become reality. That period of outperformance, followed by a market-lagging advance, is shown in the RBC chart below. "However, the data shows that Trump darling stocks — those benefiting most from such policies — only outperformed in the immediate aftermath of the presidential election," Golub & Co. said.It's important to note that during that period, the stock market was being underpinned by unprecedented monetary stimulus from the Federal Reserve that made it extremely cheap to borrow money. While corporate profit expansion certainly boosts share appreciation, the US stock market showed the ability to recover even when mired in a five-quarter contraction from 2015 to 2016. It marks the third straight quarter of earnings growth for the S&P 500. "If you're a long-term investor, and fundamentals haven't really changed to the negative, there's no reason to panic," said Sichel. "But the underpinning of good, strong corporate earnings still makes stocks a good place to be — as long as you can put up with some increased volatility."
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