Founder & Chairman
Why do we still live here? At last glance, the 10 day weather forecast shows exactly one day reaching a high temperature in excess of 20 degrees. Splendid. While the weather may be a little chilly, the stock market is anything but. In spite of some recent volatility, the equity markets have continued to “weather” (pun intended) the negative headlines from Greece, Russia and the Middle East. If I had to pick one item that people really struggle with when it comes to investing, it’s finding a way to separate how they feel about their investments versus what they see/read/hear in the news. There will always be something to worry about when it comes to headlines and investing, but I will admit, the shock value of recent headlines has been pretty horrific. The sickening murders of the Japanese hostages, and the burning of the military pilot were sad reminders that we are fighting a different kind of war these days. All that said, it underscores the importance of having a system free of emotion to guide prudent investment decisions.
Speaking of systems, a deeper look at the overall health of the market reveals that, at least for now, things appear to be in pretty good shape. From a technical point of view, while we have seen an increase in volatility which is normal and healthy, the bull market remains intact. The algorithm still shows positive growth ahead, and is nowhere near giving a sell signal. That’s good news for the portfolios. We have had quite a few questions regarding oil, and where it might be heading. Where it was available, we added oil or natural resources/energy to our models. Not all of our accounts make those types of investments available, but where they are, we added a modest amount to the mix. We are aware that oil prices could dip from here, and they could stay low for a while, however, we also think that prices have been artificially suppressed, and it’s only a matter of time before they rise again. To date, the addition has been a good move, but we are well aware that prices will likely bounce back and forth in the coming months.
In terms of market leadership, it remains mostly the same. Tech, Biotech, Healthcare have all been leading performers. We are watching closely as there may be a shift back towards mid-cap stocks and small-cap stocks in the making. Other areas that we are watching are Europe and China. The recent initiation of stimulus in Europe could be good for both European and Chinese equities. Look at what quantitative easing has done for us! Of course, there are issues with Greece and some of the other European countries struggling with indebtedness, however, one thing we’ve learned here is that you don’t fight the fed, and you can have a strong stock market without necessarily having a strong economy. Obviously, that can’t last forever, but it can go on for longer than you’d expect.
For now, we haven’t made any changes to the portfolios. Our models have been performing well, and the algorithm hasn’t signaled a shift just yet. As previously mentioned, we are keeping an eye on Europe and China, looking for the next good opportunity. As for today, it seems the best opportunity just might be hitting your favorite travel website and booking a ticket to Florida or Arizona!
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