Greetings!
We hope everyone is enjoying the beginning of summer! As we continue to witness the later stages of the Cyclical cycle transpire, it appears we just weathered a normal correction in the markets. Since the beginning of June, as of yesterdays close, the Dow Jones was down -3.26%, S&P 500 down -3.97% and the tech heavy Nasdaq, -4.33%. The markets have bounced back each day this week and seem to be on a mission to wipe out the months losses. With this, we don't believe the market action over the last few weeks is the beginning of the Bear phase of the cycle. This month we are providing a brief update. Enjoy!
Regards,Paul
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Not Much Has Changed!
By Griffin Meyers
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Since we last wrote, not much has changed. Last weeks increase in volatility and the minor pullback in the markets since the beginning of the month seems to be nothing more than a normal correction. With a market that was heavily oversold we anticipate the potential of a rally; as of this writing, it seems to be beginning this week. When we last published our newsletter, oil was at nearly $113 per barrel and has since pulled back into the low to mid $90's range. Silver pulled back from its astronomical run and the VIX (volatility index) continues to remain at multi-year lows. Our thoughts, in general, continue to remain the same. We are in the late stages of the Cyclical bull market that started in 2009. Historically, these cycles last 2-5 years. It appears we may be entering the "topping" phase that can sometimes be characterized as a "sideways" market. The tricky part to this phase is its duration can be short or drawn out. Our indicators at this point are telling us that we may see some additional upside in the short term. As always, this phase of the cycle requires discipline and our strategy is to protect capital when necessary. Until it changes however, the trend continues to point up and as a manager we will continue to "trade the trend". The grander picture continues to be the Secular Bear environment that the markets have been battling since 2000. These trends historically have behaved in a flat to downward manner, over a long period of time (typically 10+ years). Looking back at investment return over the last 11 years can confirm that for many investors! The silver lining to this trend is that throughout history, the Secular Bull environment that follows a Secular Bear can be a "once in a lifetime" buying opportunity in the markets. The key is to weather and preserve your capital during the Bear phase. The question at this point is when will this phase end and the next begin? We will have to wait and see. Our belief is that we may see some additional "shake outs" in the markets before we get to that point.
The opinions are strictly those of the author(s) and are provided for informational purposes only. No investment should be made as a result of this article without your personal due diligence and research, and with the counsel of an investment professional.
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