Quote of the Week
“There is only one side of the market and it is not the bull side or the bear side but the right side.” – Jesse Livermore
I know this is getting old, but WOW what a week last week was. Unfortunately, it was all self-inflicted. After Mr. Trump’s Tuesday impromptu news conference on Charlottesville, a flurry of corporate executives started to resign from the two Trump business advisory councils. Then to stop the bleeding Mr. Trump disbanded them.
The markets took note of the drama and sold off last week. The Dow was down 0.8%, the S&P was down 0.7%, and the Nasdaq was down 0.6%. Thursday the S&P was down 1.5%. It is a shame because the economy is doing well.
Although we still have more than a month left in the third quarter, and many more pieces of data to come, as of August 16th the Atlanta Fed’s “GDP Now” model which tracks and estimates real GDP growth, says the economy is expanding at a 3.8% annual rate in the third quarter. If correct, that would be the fastest pace for any quarter since 2014.
It is hard to remember that the original report of Q1 2017 real GDP was less than 1% growth. That report worried many investors, and doom and gloom stories abounded. But the foundation for continued growth remains in place.
It is true that the prospects for tax cuts or real tax reform are unlikely to happen this year. A survey of corporate executives gives a chance for something to happen this year at 10% and next year at 15%. A real tax reform bill is tough to accomplish with many different parties with many different tax breaks to defend.
The UPI on the S&P 500 remains at 38 out of 100. Our allocation for most clients remains the same: 65% equities, 0% bonds, 30% alternatives, and 5% cash.
Once again, I want to share an edition of the weekly “Monday Morning Outlook” column from First Trust.
To access the column directly, follow this link: https://www.ftportfolios.com/Commentary/EconomicResearch/2017/8/14/consumers-are-doing-fine
By the Numbers –
“AT THE BACK END – The highest closing value during the year for the S&P 500 has occurred in the final 4 months of the year (i.e., September-December) in 11 of the last 14 calendar years . The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research). Michael A. Higley, BTN 08-21-2017 #1
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These are the opinions of Larry Lof and Stephanie Mayoral and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs. The S&P 500 is an index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly. Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.