Low Unemployment = Lower Future Returns?

February 11, 2020

The chart of US Unemployment Rate (orange line) and the level of the S&P 500 (blue line) shows an interesting pattern since the early 1990s.  Lows in the Unemployment Rate have closely corresponded to market highs, which have historically been followed by recession (gray bars).  While the future is impossible to predict, we continue to encourage our clients to lean towards the conservative end of their target asset allocation range.

 

 

 

 

 

 

 

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Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Alpha Omega Wealth Management, LLC [“Alpha Omega]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Alpha Omega.  Please remember to contact Alpha Omega, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Alpha Omega is neither a law Firm, nor a certified public accounting Firm, and no portion of the commentary content should be construed as legal or accounting advice.  A copy of the Alpha Omega’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.aowealth.com. Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

 

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your Alpha Omega account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Alpha Omega accounts; and, (3) a description of each comparative benchmark/index is available upon request.

 

The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. It focuses on the large-cap segment of the market; however, since it includes a significant portion of the total value of the market, it also represents the market.

 

The US Unemployment Rate is announced each month by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor. The announcement includes the total number of employed and unemployed people in the United States for the previous month, along with many characteristics about them.

 

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