Stock markets around the world may have ripened to full-slip sweetness this year. Emerging markets have delivered the most attractive returns year-to-date. The MSCI Emerging Markets Index was up 34 percent year-to-date, last week. The United States and Europe have marched higher, too. The Standard & Poor’s 500 Index was up about 16 percent year-to-date, while the Euro Stoxx Index was up 11.3 percent, reported Barron’s and The Wall Street Journal.
The question is, “Have markets become overripe?’ As you might expect, opinions on the matter vary:
- Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC, “I don’t see the elements of a bear market but I certainly think 2018 can bring us a correction or at least just a more challenging market.”
- David Lebovitz, global market strategist with J.P. Morgan Asset Management, wrote in Barron’s, “Healthy earnings growth suggests that there is still upside in U.S. equities, but this area of the global equity market is most expensive relative to its long-term average. However, history has shown us that expensive stock markets can get more expensive before they get cheaper, as multiples tend to expand in the final stages of a bull market.”
- Peter Boockvar, chief market analyst at the Lindsey Group, told CNBC, “This boat is now standing room only…I still can’t figure out why some think there is no euphoria in markets when one has to go back 30 years to see this wide a spread between bulls and bears.”
Boockvar was referring to an early November Investors Intelligence Sentiment Survey, which gauges the attitudes of U.S. advisors. CNBC reported 63.5 percent of those surveyed were bullish and just 14.4 percent were bearish. A gap of 30 points is a sign of elevated risk, while a 40-point difference suggests defensive measures may be appropriate.
Individual investors aren’t quite as confident. Last week’s AAII Sentiment Survey showed 35.5 percent were bullish, 29 percent were bearish, and the remainder were neutral. It’s important to note, there was a distinct shift toward bullishness and away from bearishness in last week’s survey.
No matter what markets offer us in the coming months, try to hold-on to the feeling of gratitude that washed over you at the Thanksgiving Table last week. In the end, it’s these moments with family that are truly meaningful – not daily stock market returns.
* These are the general views of Jonathan DeYoe and they should not be construed as investment advice for any individual.
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* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The original “Weekly Commentary” was prepared by Peak Advisor Alliance. Jonathan DeYoe is a member of Peak Advisor Alliance and adds, subtracts and edits before publishing.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal.
* “There was a lot to be thankful for last week.”
https://www.barrons.com/articles/how-to-play-emerging-markets-now-1511579482 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-27-17_Barrons-How_to_Play_Emerging_Markets_Now-Footnote_1.pdf)
http://www.wsj.com/mdc/public/page/2_3022-intlstkidx.html (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-27-17_WSJ-YTD_Euro_Stoxx_Index_on_11-24-17-Footnote_2.pdf)
https://www.barrons.com/articles/on-the-minds-of-advisors-top-3-questions-of-2017-1510605584 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/11-27-17_Barrons_On_the_Minds_of_Advisors-Top_3_Questions_of_2017-Footnote_4.pdf)