Monday, December 05, 2016

U.S. equity market advance continues, as does anxiety among some

On November 20th, there was a post here entitled "U.S. equities at highs but...".  The commentary looked for a "significant correction" at some point but added "when is unknown".  That is still the thought here but the "when" keeps get putting further out.  It is a bit unsettling although how can "you fight the tape", as is said by traders.

The most alarming aspect of our current dilemma in thinking about this situation is the ongoing deterioration in global politics.  Add to that the impulsive statements by the President-elect that are defended by his servant the Vice President-elect with mind numbing explanations, and the message to the world is not reassuring. Here's the rub.  If there is any type of international incident that requires attention, who will take charge?  As is his right and obligation, it should be President Obama.  Will Donald Trump try to step in and give conflicting signals?  Will spokesperson's for Trump jump in with comments?  This could be awkward.  Trump has no awareness of boundaries.

One can do all of the work they want on equity valuations, and they will be meaningless if there is a sense that the U.S. is fractured in its actual approach, rather than bluster, to an international issue of immediate consequence.  Markets broadly will sell-off.  As an investor, it is unsettling to be living on this type of edge.

The market may continue to rise but safe harbors will be popular as well.  There is no good hedge for this screaming unknown here.  Long term investments will be maintained, new smidgens will be sought, but to continue the tune in the preceding post here on this past Thursday, "Gimme Shelter".


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