Who’s Afraid of the Big Bad Wolf?
August 3, 2017
By Resnick Advisors
Apparently, in this case, the big bad wolf is the risk of a correction in the stock market. We are getting more and more questions from clients relating to the stock market as the media continues to beat the drum of an over-valued stock market. In our opinion, such reporting is doing a great disservice to the investing public and providing only one-sided information. The reality is:
- It appears that the market is fully valued – not over-valued.
- While the U.S. appears to be slipping into a consumer-driven cyclical recession (i.e., soft sales in the automobile industry and in certain segments of retail), the reality is that corporate earnings are growing.
- We appear to be in the early stages of a global economic expansion as China, Germany, Japan, India, and even Canada are exiting their recessions. At the time of this writing, only Saudi Arabia and Venezuela, of the 43 countries we track, are showing negative growth.
- As anticipated, the dollar is weakening against other currencies (the pound sterling, the Euro, etc.), creating a very strong environment for U.S. exports, helping to offset the soft sales environment in the U.S.
- The employment picture continues to be exceedingly strong, and we are probably now at full employment, as the statisticians like to count “unemployable” people as “unemployed.”
- Consumer sentiment, as well as business sentiment, remains strong.
- Remember, the markets are not experiencing a “Trump Rally;” they are experiencing a rally based on sound economics.
- We believe it would be impossible to time the next downturn, and, even if we could, it would be unlikely that anyone could time the re-entry point.
- Did you notice that we did not mention politics? U.S. politics has little impact on global corporate earnings.
The logical choice for dealing with the risk of a correction is your asset allocation.
As always, we would be happy to discuss any of this with anyone who would like to give us a call or send us an e-mail – firstname.lastname@example.org.