MP Week In Review
Craig I Adams - Mar 08, 2019
Separating emotion from logic can be a difficult task for investors. Tempering one’s need and desire to grow their wealth or increase their monthly income can create unrealistic expectations and cause people to take excessive risk. Despite the relatively harsh fourth quarter investors were subjected to in 2018, the recent rebound that has ushered in the new year is not sustainable in our opinion. Similar to the harsh oversold conditions we witnessed in the market prior to Christmas, we are now witnessing some stretched and relatively overbought conditions. It is our opinion that while a recession is not imminent, global growth is slowing and recent trade wars have both exacerbated and clouded the issue. It is difficult to ascertain what negative impact on global growth these trades disputes have had, however it is fair to say that it has not been nothing and that one would expect that global economic data would have been stronger should these disputes had not been in place. The simple translation of it all is a period of slow global growth, should not by all accounts translate into a period of rapid global equity market appreciation. While we have often stated that the Market is NOT the Economy, they are inevitably linked.
With this week’s round of economic data; export growth slowing in China, central banks holding steady on interest rate increases and even providing fresh rounds of stimulus, it is clear that it will be anything but smooth sailing from here. All one has to do is look at the charts of all the global indexes and see the rollover this past week to see investors collective reaction to this economic data. Correspondingly our PIVOT indicator has weakened somewhat this week, however it still signals to remain invested for the time being. Our portfolios have held in well with each portfolio hitting year to date highs mid-week. We continue to monitor our holdings and will likely refrain from adding additional equity exposure until we are confident that a new up-trend has emerged.
I have often used the term “chasing beeps or bps” in our office. It relates to our daily attempt to move the portfolios forward a fraction of a percent (basis point or beeps/bps) on a perpetual basis. Slow growth does not necessarily mean slow or no growth in the portfolios, it simply means that we have to be diligent about what holdings go into the portfolios. A rapid growth or appreciating market is relatively easy, just buy anything…. This is an environment where asset allocation and stock selection truly matter. Onward we go, chasing beeps on your behalf.
Have a great weekend.
Craig I Adams
Investment and Insurance Advisor | Independent Wealth Management