Well, it's finally here. Election day. If you are anything like me, you probably can't wait for the whole thing to be over. For the ads to end. And for the finger-pointing and name calling to stop. So, here's hoping the outcome is clear tonight so the markets can move on tomorrow morning.

While we wait, I want to expend my pixels on a discussion of the recent performance in the markets. Let's start with stocks. In looking at a chart of the S&P 500 prior to Monday's blast, it is interesting to note that the venerable index was sitting below where it was at the end of May. Same thing for bonds (as measured by the AGG - iShares US Aggregate Bond ETF). And the commodities index. And gold.

Real estate (as measured by the IYR - iShares U.S. Real Estate ETF) actually closed Friday about where it stood back at the end of February. Same thing for the EAFE index (a proxy for foreign stocks).

Emerging markets (EEM - iShares Emerging Markets ETF) fared a bit better - but the EEM closed Friday about where it was at the end of July. And I can argue that junk bonds (JNK - SPDR High Yield Bond ETF) have also gone nowhere since the first of August.

Next, let's recognize that all the major asset classes fell during the month of October. Yep, that's right, everything went down. U.S. stocks fell 1.7%, foreign stocks dropped 2.2%, emerging markets lost 0.8%, the aggregate bond index shed 0.8%, junk bonds declined 1.0%, global bonds got smoked for 4.2%, commodities lost 0.3%, and global real estate was hit for 5.0%. Yep, that's right folks, everything went down in October.

Why do I bring this up, you ask? In short, because I've spent a fair amount of time on calls so far this month listening to advisors and their clients express their grave concerns about the fact that their accounts "aren't making any money."

While I'm clearly generalizing here, a great many investors seem to think that they should see returns of 3%-4% each and every quarter; regardless of what markets are doing.

While it may sound simplistic, I find myself reminding folks that money managers work with what the markets offer and not the other way around. The bottom line is this. When the markets - all the markets - move sideways or down, there just isn't money to be made. And while it doesn't happen very often, it isn't much fun, and just about everybody winds up frustrated, unfortunately, THIS is the way the game works sometimes.

It is important to remember that in the markets, investors tend to make their money in "chunks." For example, in 2013, stocks went straight up and it was easy to make money. But since then, the sledding has been much, much tougher. In fact, on a weekly basis, the S&P closed Friday roughly were it was at the end of 2014. And as of Friday's close, the S&P was up just 2% for the year.

To be sure, there will be good times again in the markets. But with valuations at elevated levels, the economy struggling to find the gas pedal, the Fed talking about raising rates, global growth slowing a bit, and earnings going the wrong direction over the past year and a quarter, it isn't surprising to see a long period of sideways movement (aka consolidation).

The Good News

However, it is important not to become despondent, to give up, or to bury your portfolio in the sand. Again, the current long, frustrating slog isn't really unusual given the environment. And the good news is that (a) the economy is not at risk of recession, (b) earnings appear to have seen the nadir, (c) inflation is not a problem, and (d) the Fed isn't going to raise rates "too fast."

So, from a big-picture, fundamental standpoint, I feel the odds still favor the bulls. And again, in my opinion, making money in this environment is going to require a fair amount of time and a healthy dose of patience. So, hang in there and remember, if investing was easy, everyone would be rich!

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

1. The State of the Election
2. The State of Global Economies
3. The State of Global Central Bank Policies

Thought For The Day:

To sin by silence when you should speak out makes cowards of all men. -Voltaire

Wishing you green screens and all the best for a great day,

David D. Moenning
Chief Investment Officer
Sowell Management Services

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Disclosures

The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

David D. Moenning is an investment adviser representative of Sowell Management Services, a registered investment advisor. For a complete description of investment risks, fees and services, review the firm brochure (ADV Part 2) which is available by contacting Sowell. Sowell is not registered as a broker-dealer.

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