Last Friday, we hosted Colin Ireland, Senior Research Strategist of State Street Global Advisors, to discuss his observations of the volatility experienced by global markets at the beginning of February.
The last week has been a very quick reversal of a nearly 14-month upswing in the global markets. Yesterday, in particular, was a wake-up call that markets are not always tame and conducive to making money. We offer below some answers to questions we have received and hope that they help. We continue to monitor the environment and will do our best to preserve our clients’ hard-earned savings.
The market has been on an upswing that has lasted longer than any time period in history without a 5% correction. 422 days when the average is typically about 200 days. The
A year ago, we wrote that all we wanted for Christmas was a bull market. Thank you, Santa! We thought we had been good but never thought we were that good. The 4th quarter continued the trend that existed all year with markets ending on a strong note. For the first time since 2012, international markets outperformed the US. The weakness of the dollar relative to the Euro and the Yen represented the primary contributor to international’s strength. When viewed from a local market perspective, Japan maintained the same strength as the US while Europe lagged given the lower growth
This is a phrase we heard a lot on our last visit to London. Though repeated as the subway doors open, it brings other ideas to us. Specifically, the gap between the expectations of some investors and what turns out to be the reality. All bubbles eventually “pop” (or at least deflate). Among other issues highlighted in this issue of our newsletter, we ask investors to consider that all assets follow a cycle, but not all assets follow the same cycle; a broader viewpoint may be necessary for distinguishing a cycle’s characteristics.
“The market always does what is least
We like games, but not all games. Some make us tense such as the Hasbro game named Operation. As a child growing up in a warm and nurturing environment, hearing the BUZZ as you touched the side not only scared you, but risked driving you to tears. We believed we could have killed someone if given a plastic scalpel. Jenga is another game that makes us tense. To make it worse, it is not just your actions that could drive to failure. Those players before you place the tower of blocks in an ever more unstable situation. But
The Quarter in Review
The quote used in our 1st quarter report was “It is best to rise from life as from a banquet, neither thirsty nor drunken.” We have been investing in accordance with that quote and maintaining a near fully invested stance yet conscious of the growing optimism witnessed in the world markets.
Global markets, especially equity markets, have continued rising with little performance difference between the major equity classes. Emerging markets have continued their rebound this year and now match, looking back over the past 12 months, the equally impressive performance of smaller US companies. Growth companies have continued
We are strong believers in Peter Lynch’s quote, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections than has been lost in corrections themselves.” Because fearmongering market pundits profess that a correction is always near, we, therefore, continue to rely on Lynch’s statement.
There is no doubt that headlines these days are bad. North Korea becoming more emboldened in its desire to wreak havoc on the world as they defend their reign. The US government breaking new records for partisanship. Civility becoming second to rage in our own communities as extreme elements take to
We are ones to look both ways even when crossing a one-way street. It is ingrained in us to watch for the unexpected. We’re believers in the saying, “It’s the punch you do not see that knocks you out.”
Although we stand in a near fully invested stance at the time of this writing, we are always looking for signals that will change our positioning. Catching our attention at this moment are China’s wealth management products (WMPs). In our last commentary, we briefly highlighted that WMPs may be a potential pain point for the world’s financial markets. We said that the
“Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses while giving disproportionately less consideration to alternative possibilities.” – Wikipedia
The S&P 500 index, a proxy for the US equity market, has risen 6% in the first ten weeks of 2017 and almost 30% from the February lows one year ago. Throughout the run-up, investment pundits have expressed concern that the market was richly valued, citing the historical highs in one measure of equity market valuation.
There are ample reasons to be cautious, but valuation is not high on