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Out Of The Box

Investment Committee Update - 2019 Q3 

Optimistic, Bearish, or Exuberant?

Worldwide economies have been slowing recently, and the slowdown is centered on global manufacturing and trade. Where does all this leave investors—scared, confused or bewildered? 

We have grown accustomed to bull markets ending when investor euphoria becomes overly zealous and the Federal Reserve (FED) raises interest rates to temper jubilant markets. Remember the false schools of thought suggesting the stock market ONLY goes up or owning a home ALWAYS makes money? In hindsight, these time periods marked the end of the economic cycle with a correction eminent.  

Can euphoric bubbles be found in today’s market? If the current market pattern holds true, plenty of upside should remain in this historically long market cycle. The recent knee-jerk pullback in response to escalating trade tensions between the US and China have effectively restricted strong gains in the stock market. Whether the topic has been tariffs, interest rate increases, interest rate decreases, negative interest rates, or other impactful headlines, the stock market has been sluggish in its slow, sustainable push to achieve record highs. Despite the record highs, the investor’s attitude remains either marginally optimistic to slightly bearish — far from being euphorically exuberant.