Before the Jackson Hole Meeting – I posted a blog entitled “Market Musings” early last week. In that blog, I cited several reasons to be cautions coming into the end of the week. I also noted that ValueTrend had raised more cash in our equity models – about 40%. For those not familiar with the culture within the Portfolio Management Business (which is substantially different than managing your own portfolio) – it is considered highly unusual and, quite frankly – a fairly bold move to go much above `10% cash. But, that is where ValueTrend differs from our competitors. We are not afraid to make strong allocation changes according to our rules.
Anyhow, I do hope you paid attention to that blog. So far, it appears that the market may be setting up for a rough September/October. It will be interesting to see if the SPX can hold the round number (psychologically important) of 4000 in the coming days and weeks. I will post a blog later this week with some thoughts on market movements over the fall.
Meanwhile- I thought I would pass on to you some notes I read concerning the current market outlook byt the largest Portfolio Management firm in the world, Blackrock. These guys are definitively in the “Smart Money” group – so its worth hearing them out.
Blackrock is bearish
Investment giant Blackrock recently downgraded view on equities. BlackRock also said traditional 60/40 stock-bond portfolios, and “buying the dip” — or reflexively purchasing stocks after a short-term decline — are no longer likely to be effective investment strategies. The firm indicated it favors investment grade credit along with reducing its stake in equities.
“We see a new era of volatile inflation and growth sweeping aside a period of moderation,” the firm said in commentary Monday. “We downgrade equities and upgrade credit in this new regime. Right now, we think the Fed has boxed itself in by responding to political pressures to rein in inflation,” strategists led by Jean Boivin said in a note published Monday. “Eventually, the damage to growth and jobs from fighting inflation will become obvious, in our view, and central banks will live with higher inflation.”
In similar commentary last month, BlackRock strategists argued the US central bank’s rate hiking campaign may stall economic growth without necessarily solving inflation pressures. The firm argued high core inflation had been been driven by “unusually low production capacity in an incomplete restart following the pandemic” rather than overheating demand.
Ask us anything: Deadline for questions Sunday Sept. 4th
Long termed readers of this blog will be familiar with my “Ask me Anything” special edition blogs. These blogs allow you to post your questions, and I take them one at a time and post a few follow up blogs to answer the questions.
I’m going to do things a little differently this time. First, I am making it an “Ask US anything blog. I’ve asked Craig Aucoin, who co-manages our Managed platforms to step in to answer any questions pertaining to economic or fundamental analysis issues.
To take it further, the questions will be be answered in a video format. As always, the transcript of the video will appear below the episode, so those who like to read rather than watch can do so.
For those who haven’t followed this blog for long – here are the ground rules for the “Ask me” blogs:
- Investment questions should be of broad interest to many investors. They can involve broad-sector questions, questions about various international markets, or questions about individual commodities or bonds.
- Please don’t ask about individual stocks. The exception might be in massively followed mega-cap stocks like the FAANG’s. Better to ask about stock sectors, world markets, asset classes, commodities, etc. For example: Cannabis, gold, European markets, the utilities sector, the tech sector, oil, transports, long bonds, etc. Lets say you are interested in the banks. Ask about the US banking sector rather than my opinion on Bank America. Or you might just have questions on technical/fundamental analysis rules, or unique strategies like hedging or stop loss rules, etc.
- You can ask as simple a question as you wish. And don’t worry – there’s no such thing as a dumb question! But feel free to ask the hard stuff too! I’ll do my best to get as many questions covered as I can. One question per reader, only.
- Questions on technical analysis methods and contrarian investing are very welcome.
- Questions on fundamental analysis are also very welcome, as are broad economic issues. Again…No individual stock analysis questions, please.
- YOU MUST POST YOUR QUESTIONS IN THE COMMENT SECTION OF THIS BLOG AND NO OTHER BLOG. DO NOT EMAIL US. POST A COMMENT ONLY.
Thanks, and we look forward to reading your questions!