Yesterday the financial markets experienced a sell off after a long ascent. Here are some important things to think about.
- One key question is: how much of the market's rise has been politics/ policy-related, versus grounded in fundamentals? While yesterday's sell-off may have a little more to go, we try to focus on market fundamentals. Corporate earnings growth both domestically and overseas has been strong over the last quarter. Economic growth, inflation, interest rates, corporate sales, profit margins, and earnings all suggest the economy remains robust and the current bull market has not run out of steam.
- Similarly, the bond market has garnered support from central bank actions globally and low interest rates overseas. Further gains in the bond market for 2017 may be muted but high-quality bonds still provide balance for the portfolio.
- Policy and geopolitical risks should be monitored, but so far have had only a marginal impact on the market's fundamentals. We remain diversified and disciplined in our long-term investing plans for you, and encourage you to stay the course.
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