Investors Should Expect Rougher Times Ahead

In a recent Barron’s article in which he describes the current U.S. economic expansion as an “Indian summer”, JPMorgan chief strategist David Kelly says that investors should guard against being “overly enthusiastic about overvalued assets” at this late stage in the cycle. Despite human hardship, Kelly points out, the rebuilding necessitated by recent natural disasters will be a positive from an economic standpoint, and potential tax cuts could be a boost going forward. Earnings and GDP growth should continue in the short term, Kelly says, but both could slow by the second half of next year. He argues that, without […]

When Everything Seems Good, Investors Should Still Prepare for Market Dips

The bull market and upbeat economic landscape doesn’t tell us much about the future, says a Wall Street Journal article from earlier this month, “and the rise in stocks makes it less likely the general awesomeness will continue.” According to the article, worry has “all but disappeared this year,” but this creates a situation where investors are less prepared for bad news. However, the article argues, there are “few signs of irrational exuberance” to make investors wary. And since investors tend to believe that bear markets only come with recessions—and there don’t seem to be any indicators that one is imminent—they subscribe […]

Investor Complacency Doesn’t Mean Clear Skies in Market

The market has seen low volatility and years without a major correction, writes Ben Carlson of Ritholtz Wealth Management in a recent Bloomberg article, but this doesn’t necessarily mean investors are complacent. Carlson cites data compiled by Yale professor Robert Shiller that show investor concern regarding market valuations and a “potential market crash” are both “showing much higher levels of anxiety.” He also shares a comment from Howard Marks of Oaktree Capital, who thinks that investors are behaving in a bullish manner even though they might not be feeling bullish. “What accounts for the difference?” queries Marks. “Rates near zero,” […]