Outlook for 2018

Happy New Year! 2017 is in the books and its been a great year for investors all over. The US equity markets are flying high as all major indices continue to ring in all-time highs month after month; the multi-decade bond peak seems to be in, as interest rates are now on the upswing — not just in US, but in other countries as well. The commodities markets are starting their bull run as inflation is starting to rear its head after years of potential deflation, disinflation, and stagflation. New tech like blockchains and the cryptocurrency mania is capturing the imagination of the masses and making plenty of investors obscenely rich in a short period of time. But at the same time, every single sector/market has some dark clouds on horizon too — as investors get carried away and assume that risk has been mitigated which may not necessarily be the case.

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Outlook for December 2017

Well, the year is already coming to an end. The year has seen some tremendous moves as the stock market has continued to ignore fundamentals and rally higher. It will be interesting to note how the year will wrap up as tax-loss selling and Santa Claus rally come into play.

Not much going on in the broad markets that seems interesting enough as volatility remains depressed. The flattening yield curve is something that investors have to keep an eye on and watch and understand what its signaling.
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Outlook for November 2017

The stock markets is starting to melt upwards! The mania continues as investors pile into equities and last week saw top 3 tech companies Amazon, Microsoft and Alphabet add $144B to the market cap in just one day, equivalent of one whole IBM. Yet, everyone continues to convince themselves that this is a fundamentals-driven market. Nothing can be further from the truth. This is purely a valuations-driven market as investors pay a higher multiple on almost every metric out there — from stratospheric P/Es, P/Bs, P/Ss etc. The following chart from Hussman Funds puts the median price-to-revenue ratio of S&P 500 stocks into perspective.  
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Outlook for October 2017

The stock markets continue hitting all-time highs. The party continues on even as most investors agree that the valuations are stretched. It is interesting that valuations don’t seem to matter as most “pundits” keep throwing phrases around like — “Yes, valuations are stretched, but stocks will double from here”.  The hubris is not just with the commentators. We have Fed chair saying — “No more financial crisis in our lifetime” and executives like American Airlines CEO saying “We will never lose money again”. Pure madness! 
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Outlook for September 2017

Is there anything that will make investors falter during these times? The market seems to be resilient to any/all bad news that comes its way as things are brushed aside and the march to new highs continue. However, there is no dearth of major issues on the horizon, with margin accounts sitting at record, auto-loan delinquencies piling up, household debt load skyrocketing, pensions debacle starting to unwind, US debt-ceiling on track to hit in late Sep/early Oct and many many more. 
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