This Week in the Market

With Scott McCaghren and Tony LaPorta

It has been a volatile ride for equity markets over the last five sessions, to say the least.   This time last week yielded the conversation of new records levels being a short distance away.  That mindset became quickly questionable as the DJIA and S&P 500 dropped 1000 and 100 points, respectively, in two days.  Some attributed this sharp sell-off to the coronavirus out of China while others speculated the bombing of a US Embassy in Baghdad.  Tensions around the globe continue to percolate as investors are forced to at least consider the possibility of future military engagements.  On the flipside, investors are also forced to acknowledge that U.S. equities are currently the most attractive avenue for investment dollars because of limited competition for return.  This has seemingly caught domestic equities in somewhat of a “yo-yo” pattern.  Monies flow into our economy/market to only be subjected to bouts of volatility due to geo-political events.

We have somewhat adjusted our mid-term outlook to be moderately bullish while acknowledging that volatility is likely here to stay throughout the entirety of the year.  We have re-balanced the portfolios to capture more upside potential but have meticulously designed them for these volatile outbreaks.  We are also keeping in mind the idea of volatility typically being found at the highs and lows of current trends.  This has us evaluating portfolios decision on a shorter time-scale than our typical outlooks.  The obvious positive from this is that we will be very reactive to changes in trends, if that in fact does take place. 

 

The overall consensus from a statistical vantage point shows a run higher across the equity board for the next nine months.  We have adapted the models to take advantage of that while realizing that there are several major global events floating out there to potentially disrupt that.  This is not to sound skeptical of the market’s ability to produce returns this year, merely to point out that we are keeping a very tight pulse on the markets as a whole. 

As always, we continue to monitor all equity, treasury, commodity and currency conditions in order to efficiently deploy capital as well as protect invested assets.

Scott McCaghren

Tony LaPorta

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