The Equity Rally: Is The Market Pulling a Kramer?
By John Persinos
Today for investment insights, instead of turning to super investor Warren Buffett, let's consider hipster doofus Cosmo Kramer.
As the stock market rally forges ahead, I'm reminded of an episode in Seinfeld, when Kramer drives continuously to see how far he can go on an empty tank of gas. His experiment becomes increasingly absurd as he refuses to refuel, pushing the boundaries of common sense and automotive physics. He eventually gets stranded.
Last week, the Dow Jones Industrial Average and S&P 500 posted new record closes. Valuations are getting stretched, especially in the technology sector. Are investors continuing to drive the market further, even though the tank is running out of fuel?
Despite the warnings of pessimists, I think the broader bull market has plenty of gas left. Below, I'll explain why. I'll also show you how to position for portfolio for the year ahead.
The Bull Case Remains Intact
The Federal Reserve is poised to trim interest rates later in the year, and the U.S. economy is racking up the best rate of gross domestic product growth among advanced economies. Consumers are showing signs of fatigue, but they're still spending amid a strong but not overheated jobs market.
It's amazing to me that most Americans still kvetch about the economy, even though the U.S. unemployment rate currently stands at 3.7%, a 50-year low.
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