Markets have recovered from a recent bout of weakness but signs of hesitation and uncertainty remain. Risks surrounding geo-political events (North Korea nuclear weapons testing), domestic U.S. politics (widening Russia – White House probe, gridlock in Congress on health care and tax reform), natural disasters (Hurricanes Harvey and Irma), commodity price swings (oil falling/rising 10%), impending changes to monetary policy (Fed starting to shrink its balance sheet), etc. have resulted in markets trading in wider ranges over the late summer in thin trading conditions. These important event risks and the lack of a meaningful market correction of 7% or more for over a year-and-a-half while the S&P500 trades near recent all-time highs leaves the market susceptible to a pullback during the seasonally weaker September-October period. We would view a sizeable pullback in markets as an opportunity to put any cash overweights to work given strong corporate fundamentals and low year-ahead recession risks.
The insidious impact of political and media ‘noise’ on investment decisions.
Google ‘Top 10 investment mistakes’ or some variation of that phrase and you’ll come up with dozens of opinion pieces telling you exactly what they are. There will be significant overlap in many of the views expressed – not having clear investment goals, being insufficiently diversified, focusing on short term performance, being just three of them – but many will overlook two of the most insidious enemies all investors face: the impact of political and media ‘noise’ on investment decisions.
A recent bulletin from the CFA Institute, written by Robert Stammers, CFA, Director, Investor Education, offered a compendium of Tips for avoiding the top 20 common investment mistakes. It’s an excellent shortlist and I recommend it to you. Buried in the bulletin was the following gem: ‘But looking past near-term chatter to the factors that drive long-term performance is a worthy undertaking.’