Last week the market was in a panic as it appeared President Trump not only would not be able to implement any of his “good” ideas, but also increasingly likely he wouldn’t still be president at the end of his first term. Then he left the country and everyone seemed to forget about the growing mountain of obstacles he is facing to implement any sort of pro-growth policies.
Since 2012 when the Fed implemented QE3 risk managers have been looking at every drop in the market as “the big one”. History, valuations, fundamentals, and simple common sense tells us the market is at risk of a major correction in prices. Yet every time the market quickly reverses back to the highs, a few more of the bears give up and a few more bulls emerge from the sidelines. This can go on far longer than most of us believe it can, which then makes the cycle even more pronounced.
When & why it ends is anybody’s guess, but when it does it will not be pretty. Until it does, we will continue doing what we’ve done the past 25 years — providing a mechanical way to ignore all the noise in the market with portfolios that are designed to give our clients a well diversified portfolio that makes sense for their personal financial plans.