Outlook for February 2018

Seems like the year 2018 just started, and we are already in February?! Time sure is aflyin’. Time to look at what the markets are doing and present my outlook for February 2018. Things seem to be getting interesting now. The stock market has continued its climb with some great returns just in the first 30 days. However, the last few days saw some bloodletting that was interesting to note.

As I mentioned in my Outlook for 2018 post, the US$ will be the most interesting asset to observe in the investing universe. The moves are already pretty apparent as the slide has accelerated during the first month of the year. The US budget deficits are getting more media attention, the US government saw a brief shutdown — only to kick the can down the road for a short while, interest rates are rising while the currency is sliding — the US market is behaving like an emerging market!! These are interesting times, no doubt. I will be keeping a very close eye on the US$ and continue to position myself to protect my purchasing power as the world’s reserve currency continues down the devaluation path.

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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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