Saturday, September 03, 2016

A break to reconsider the market

This three day weekend will be a time for many to relax and maybe, while doing so, have a few unfettered thoughts about the stock market.  Will there be a post Labor Day ramp up of activity?  It surely could not slow down more.  Will major institutional investors and pension fund managers begin to take more risk and do more trading to assure, or try to assure, that their year will be better than it looks now.

Very recent results have seen a resurgence in long dormant small caps, mid-caps outperforming large caps, and emerging markets showing some life.  There is no reason to bet that these trends will continue, but if the large cap dividend trade becomes even more crowded the near term, opportunity may still be in be those areas.

There is a thought here that the ongoing election pyrotechnics have investors standing back aghast, simply not able to fathom what will happen as the next two months unfold.  There appears to be no way to trade this, and uncertainty is part of the market activity stall.  It would not be surprising if this uncertainty leads to a near term drop in equity prices, a drop based not only on any flight from equities but also a repricing of equities based on boredom, ambivalence, and the inability of investors to analyze the impact of political events.

Given the lack of alternatives, most investors will stay the course but it is not especially satisfying.


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