Below is a snapshot of last week’s market performance and what to watch in the weeks ahead from Chadd Mason, Cabana CEO and co-founder.
U.S. stock markets continue to climb the “wall of worry”. It has been two steps forward and one step back over the past month. This is exactly what we want to see in a healthy bull market. The blast off from the December lows is over and we are now witnessing a return to lower volatility trading.
Over the past several weeks, we have discussed the outperformance of emerging markets (like China) during the first quarter. This helps a variety of asset classes and markets. First and foremost, there is buying across the commodity sector – energy and copper are standouts. This helps the transportation index, as well commodity-based economies around the world, such as Latin America. Additionally, strength in China may finally help pull Europe out of the doldrums. Let’s not forget that China is the second largest economy in the world. I will try not to beat a dead horse, but I have said many times over the past year that we need participation from other economies for the U.S. to continue to move forward. The lack of strength around the world, in my opinion, played a big part in the selloff we saw here last year. Conversely, the strength we see now around the world helps our stock markets regain their footing. Interest rates remain subdued and provide support for real estate, bonds and dividend payers.
How long this “Goldilocks” economy will last is anyone’s guess, but a climb to new highs by the S&P 500 and the other broad indexes seems inevitable. We remain bullish.
Wall of worry is generally used in connection with the stock markets, referring to their resilience when running into a temporary stumbling block, rather than a permanent impediment to a market advance.
A Goldilocks economy is an economy that is not so hot that it causes inflation and not so cold that it causes a recession.
A PDF of this week’s market commentary is available here:
This material is prepared by Cabana, LLC(d/b/a “Cabana Asset Management” & “Cabana Retirement Solutions”) and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.
This material may contain ’forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.
Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV, Part 2. A copy of which is available upon request or online at https://www.adviserinfo.sec.gov/.
Cabana did not pay a fee to participate in the ranking and survey and is not affiliated with Financial Advisor Magazine. RIAs were ranked based on percentage growth in year-end 2017 AUM over year-end 2016 AUM with a minimum AUM of $250 million, assets per client, and growth in percentage assets per client. Visit www.fa-mag.com information regarding the ranking.