Seeing The Forest for The Trees
In the dynamic realm of capital markets, it’s all too easy to become engrossed in the intricate details of isolated data points, geopolitical tensions, and statements from the Federal Reserve. However, it’s crucial to take a step back and heed the age-old wisdom of “seeing the forest for the trees.”
Unquestionably, the recent tensions between Israel and Hamas have raised concerns among many investors. Questions have arisen, such as, “Will the market decline due to the potential conflict?” In response, consider this perspective:
Over the past two weeks, several Federal Reserve officials have essentially conveyed that the recent rise in the 10-year Treasury yield is effectively doing their job for them. Despite a slight uptick in the CPI data last week, it continued to show a sustained decline in inflation, with the CPI lower than it was in August. Robust economic growth data from two weeks ago, exemplified by a strong jobs report, consistently low weekly jobless claims, and the positive ISM Services PMI, do not currently signal an imminent economic slowdown. Add to this list, Retail Sales, which came in triple the consensus estimates this morning! And let’s not forget the impressive reports from the likes of JP Morgan, Wells Fargo, Citigroup, Blackrock, and PNC Financial last week to get earnings season kicked off.
The overarching point here is that fixating on one geopolitical event or a handful of challenging remarks from the Federal Reserve can obscure your perspective and leave you feeling despondent. A few naysayers have told me that I’m overly optimistic for buying the recent dip and I admit they could be right, however, nobody has ever made a dime in the markets sitting on the sidelines, and history shows, if the market is up more than 10% through July (which it was), and August is down (which it was), the remainder of the year is up 100% of the time with an average gain of 9.9% (median gain of 8.7%). I’ll take those odds and leave you with this masterpiece from one of my favorite market strategists, Jeff Saut:
Here is a list of everything the markets have overlooked since the Great Financial Crisis:
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Best Regards,
Edward J. Sabo
Important Disclosures: Past performance is not a guarantee of future results. The statements contained herein are solely based upon the opinions of Edward J. Sabo and the data available at the time of publication of this report, and there is no assurance that any predicted or implied results will actually occur. Information was obtained from third-party sources, which are believed to be reliable, but are not guaranteed as to their accuracy or completeness.