Crazy 3rd Quarter and Beyond
One of the things I love about my work is the way markets move and adjust through a complex interplay of “facts” (growth in the economy, historical pricing, risks to businesses) and investor’s (both individual and institutional) perceptions. 2016 goes in the history books as one of the most intense games of tug of war I have experienced. This tug of war is why, at Integrē Wealth Management we use both fundamental ( what companies are doing well) and technical (how investors are valuing those companies) analysis in our investment management process.
FUNDAMENTAL: Please visit our Education Center to view the Raymond James 3rd Quarter Investment Strategy quarterly. This quarter reviews a couple of major themes: Interest rates are likely to go up sooner rather than later, US earnings are poised to improve, and we may be seeing a re-emergence of the beaten-down emerging markets. Mike Gibbs’ article on page 6 is particularly interesting regarding earnings, and Peter Greenberger’s on the Emerging Markets on page 9 outline why some of the EM headwinds are stabilizing.
TECHNICAL: On the technical analysis side, we are seeing these themes confirmed. After out-performing other sectors for this year, we are seeing a major rotation out of the Consumer Defensive sector and into Technology, selective Financials, Energy, and Industrials. We are also seeing strength in the performance of the Emerging Markets. Developed international has underperformed the US so far this year.
PERCEPTIONS: No matter what the “facts”, almost everyone I speak with is cautious about the market. Of course! Brexit, the US election, possible bank failures. Volatility is a fact of life that we now live with. It is imperative that each investor review their asset allocation, cash flow needs, and risk tolerance so that during periods of volatility like we will inevitably have in the coming months you feel confident in your long range plan.
Don’t hesitate to call us if you would like a second opinion on your Investment Portfolio.
Views expressed in this blog are the current opinion of the author and are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Opinions expressed are not necessarily those of Invera Wealth Advisors.
Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.