As we head into summer this weekend we are ready to relax but we always have a keen eye on the markets. We have a tradition at CMG of consistently producing intelligence for clients, advisors and the investing public no matter what the season.
You can find CMG intelligence here at Advisor Central twice a week. Steve Blumenthal produces a weekly outlook called On My Radar every Friday, and Trade Signals on Wednesday. Sign up for Advisor Central updates here and on the main CMG Capital Management Group site for On My Radar and Trade Signals.
High market valuation was a major theme this week. In Steve Blumenthal‘s second piece as a Forbes Contributor titled Stock Market’s High P/E Suggests Lower Returns Ahead, he writes:
With the stock market setting new highs, investors face unusually tough choices. An examination of historical valuations points to low forward returns for the U.S. stock market. Normally, bonds would provide a safe harbor, but interest rates are still near historic lows. They will not provide the same portfolio protection as in years past and, worse, bond prices will decline when interest rates rise. It is tricky to structure a portfolio in the face of these risks but there are moves you can make right now.
In the 6/18/2014 Trade Signals: Extreme Sentiment Across the Board Steve Blumenthal writes:
The cyclical trend remains positive as measured by Big Mo and the Fed remains supportive for now. Caution is advised as the cyclical bull is aged and investor sentiment is once again in the Extreme Optimism zone. I continue to expect a sizable summer sell-off and favor hedging your equity exposure and actively managing your bond exposure in a disciplined way (i.e.: Zweig Bond Model).
If we can help our clients clearly see what the future may hold, they will have a much better idea how to prepare for it. They will have much more confidence as we move forward and much more courage to weather any short term adversity. This enables them to reach forward to achieve the vision of their future. As Zig Ziglar said, “A compelling dream will generate the obedience to push past our fears.”
Have a great start to Summer 2014!