Heartburn, Not a Heart Attack
The last few weeks have been difficult for stock markets around the globe. Not long ago, many investors were kicking themselves for not investing more when the stock market was cheaper. But when stocks fall, like they have in the last few weeks, many investors have a hard time buying for fear stocks may go lower still.
Who knows, maybe they’re right. We have no idea where stocks will close today, nor at the end of the week. Corrections (both small and large) happen from time to time. In hindsight, many claim they knew it was coming, but we don’t know anyone who has successfully traded corrections on a consistent basis – we certainly won’t try.
The odds of a recession happening anytime soon remain remote. And a recession is what it would take for us to expect a full-blown bear market. Economic growth around the world is strong, companies are reporting excellent increases in earnings, interest rates are still very low, inflation is low, and we have yet to see Euphoria take over stock markets. These facts lead us to believe that the cycle is not yet coming to a close.
To steal a phrase from a recent commentary by Brian Wesbury, Chief Economist at First Trust, the current downdraft looks to be an episode of heartburn, not a heart attack. We will continue to monitor the situation and will make changes only if we feel the evidence warrants a change.
Interesting reading for the month:
1. Cannabis investing has been front and center in Media coverage for most of 2018. Attached is an interesting article written by a team focused on Responsible Investing. Will Cannabis be considered an Ethical or Sustainable area of investment? What are the criteria and considerations? Read on to find out more. Please note that we may not share the views presented in this article.
2. We have a tendancy to notice the bad more than the good. This concept is explored further in the most recent quarterly commentary from Edgepoint.