Currently, we are in one of those confusing times periods of data. However, we particularly like this type of confusion. Don’t get me wrong, confusion makes decision making difficult. So, let me explain.
The stock market has rebounded from a near Bear market that was ferociously fast at the end of 2018. The first three months of 2019 have given us really great returns. The uncomfortable confusion is that the US economic data continues to slow down. Yes, there are bright spots, it seems that the US and China may have a trade deal and the unemployment is staying stubbornly low meaning there is work for nearly everyone looking for it. Yet, when we have a growing market and a slowing economy one of two things will happen; the market will fall or the economic data will rise. In truth this is really not that confusing, data is what it is. We simply watch the data, be patient, and use our rules-based decision-making process to allocate our clients’ accounts. We use a specific momentum modeling trigger to make the risk on or off changes in your portfolio. This helps keep this noise to a minimum, especially in times like this; helping us invest with the market direction (momentum) and not against it.
This leads us to be in the position that we are in today, very pleased with how your investment model is performing. We will continue to watch the data and let it educate us. In turn we will keep you informed.
The following report is from our investment team. Feel free to study all that you want to, it is very in-depth. Feel free to completely ignore it and call you advisor to make him explain it to you as well!
- Valuations remain elevated for US equities and future returns look set to be below average.
- Economic growth continues to slow globally and domestically.
- The 4-week average of the WLI is down -2.54% year over year.
- Stocks had a great quarter with the S&P 500 up 13%. It was the best quarter for equities since 1998.
- The FTSE Total World Stock Market index remains in a negative trend relative to Treasury notes across intermediate and long-term frames. It is positive in the short-term.
- Over the last quarter high beta dominated the factor landscape. Low volatility is the top performing factor over the last six months.
- Technology was the top performing sector for the quarter. Real estate is the top sector over the last six months.