Month: April 2017

A key statement from this month’s Executive Summary is:  “As we wade through the Economic, Fundamental, Technical and Tonal aspects of the markets in this month’s essay, all of which confirm the current state of Market Churn and possible topping action, there is a gem hidden within these writings, one that should be pursued in terms of seeking knowledge.”

The April 2017 newsletter has just been issued and covers the following areas:

• Economies across the globe are exhibiting growth.  
• What are stock market valuations telling us? 
• Why are we churning each day in a way that leaves us running in place?
• Are we going through a topping pattern? 
• Where am I allocating capital in this environment?   
• The “Imagining the Future” section looks into what may be one of the most compelling investment opportunities in the world today

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The Newsletter for March is now free and is available below by clicking on the link to the article.

Executive Summary Issued March 17, 2017

Economic growth, inflation and interest rates are on the rise across the globe.  Fiscal stimulus is beginning to complement/replace monetary stimulus and the impact is giving us economic green shoots, optimism, expanding employment, increases in production and consumption, and the emergence of rising inflation expectations.  These factors, along with a pro-business posture in government, have directed the strong monetary flows that have been in the financial system and channeled them with aggressiveness into the equity markets.  The result has been a dramatic rise in the equity indexes since November 2016. This rise has been further fueled by the movement of the retail investor out of money markets and into equity index funds.  The monetary fuel and the expectations of a struck fiscal matchstick have ignited this fire, and for many it has been a great ride.  For others, there is a sense of having missed the parade which is driving a newly inspired desire to join in and to buy stocks. Per the WSJ, Fund tracker EPFR Global reported record net inflows into equity mutual and Exchange Traded Funds during the week of March 1st, clear evidence of the herd moving in one direction.  Jamie Diamond of JP Morgan was recently reported to have stated that the animal spirits are back and in play.  I wonder if that is good or bad.   A contrary observation to the above is the ratio of company executives buying shares to those selling shares in their own companies.  This ratio has slumped to a 29-year low as selling overwhelms buying.  That observation more or less aligns with my personal activity in the market.  I am not joining the buying parade, for while the reasons for the powerful move higher have substance, the regime of the market in terms of over-valuation, weakening market internals, and the move towards tightening of monetary policy present a real reason to be cautious and conservative until a better entry point appears.  That summarizes my current approach. The link below will provide you with the full report. [email protected]

CFA March 2017 Newsletter