It would be remiss of investors to rule out a retest of the June lows. This post explains my reasons not just technically (which has served us well) — but more so fundamentally. Have we fully priced in the impact of where rates are likely to head in addition to QT?
The Pendulum Swings
When things are going well and prices are high, investors rush to buy, forgetting all prudence. Then, when there’s chaos all around and assets are on the bargain counter, they lose all willingness to bear risk and rush to sell. And it will ever be so – Howard Marks
Markets Big Bet on a Dovish Fed
The S&P 500 is pushing into an area of clear technical resistance. What’s more – fundamentally it’s no longer cheap at approx 18.5x forward earnings. My thinking is the market is not an attractive risk/reward bet at these levels… and are under-appreciating the task in front of the Fed.
Do Upside Gains Easily Outweigh the Downside Risks?
With the S&P 500 some 14% off its lows – trading just below 4200 – at 17.5x fwd PE – what’s the potential upside reward? And do those potential gains outweigh the downside risks?
For a full list of posts from 2017…