I’m writing this post from the stunning lobby, biding my time before taking the stage at an exclusive gathering. I will be speaking on the long-term trends shaping the global economy and markets and my slides are ready to go.
Wall Street’s bears remain dormant. Some famous bears have either capitulated or conceded that the chances of a significant drawdown, which would justify their aggressive bearish stance by year-end, are quite slim. The US economy is thriving, and stock prices are reaching new peaks.
Let there be no doubt, I remain bullish on the risk assets in my range of portfolios. Congratulations! US equities are once again outpacing the rest of the world. I have written a fair amount on this issue in the past. My less volatile investments include long-duration bonds and gold.
We are still in June and so far so good. For those interested, July appears promising. The S&P has consistently seen positive returns in July since 2014, while the Nasdaq 100 has rallied for 16 consecutive Julys.
Damn it! I must be out of my mind ignoring the plethora of risks, including politics, geopolitics, still elevated inflation/rates, stretched valuation and the long list continues. I’m not going to talk about Nvidia which has added USD1.78 trillion of market capitalization this year alone.
Short-term market volatility won’t easily shake my confidence. I have a high tolerance for risk, provided I understand what I’m doing with my hard-earned money. While markets may not always behave rationally in the short term, risk and return tend to align over the longer term.
What about the Fed? It is not my primary concern. Will the Fed get it right? Can they get it right? Interest rates matter, but perhaps not as much as central bankers and economists think. Phew! It helps that the Bank of Canada went ahead with a cut, becoming the first G7 central bank to ease.
As for the path to the US election, historically, the stock market shows strength in the summer of an election year, typically cooling in September and October as Election Day approaches.
I’m getting this question all the time. Are digital assets a playground for scammers or just another passing trend? Many people, including some of my clients, view digital assets as a fleeting craze destined to collapse. They are simply not focusing on the right aspects. They are neglecting analysis in favor of consuming “narratives” penned by some experts who possess minimal understanding of the subject matter.
Having a well-thought-out investment strategy can help navigate the volatile nature of digital assets effectively. Well, this is not your pilot speaking, but do buckle up and make sure your tray table is secured.