Near New Highs

Readers of this blog will note that I have been short-term cautious on the markets for a while now.  Stocks however are near new highs, although as of this writing they have yet power past last winter's levels.  Regarding my comments versus the markets I'll say this.  First of all this my short-term view of things.  At the most and given what we know today, this is a viewpoint that right now only extends into the fall.  I think there's a possibility that we'll see more volatility as the election season comes around.  The economic news flow has helped stocks so far in August as it has for the most part been positive but that may not be enough to outweigh political concerns as we get closer to the November elections.  There is still time for us to be short-term cautious, even if those fears haven't yet played out or even if this year they do not work as one might historically suspect.

The 2nd thing is that I am not a short-term trader in client accounts.  When I point out near term market events it is simply to note the environment we are in.  Do not come here looking for trading advice.  That is not my skill set and nobody is paying me to act in that manner for their investment returns.  I have a longer term view of things and unless the economic view is changing I am often looking at volatility and the oversold conditions that come with it as an entry point for positions that I find attractive.

Finally I'd note that the markets get to vote irregardless of what any one of us who comments on stocks might think.  The market is also the final arbitrator of events.  Its opinions matter more than mine and always will.  To be cautious in a period where stocks have historically been volatile is simply part of mining the historical record.  Many years bad things have happened in the August-October period.  Just because that has been the case in the past doesn't mean it has to work this way this year or any given year.  This is similar to those of us who have navigated a river before in a boat or a canoe.  If around a certain bend in most years there is a sand bar then it pays to be cautious when you get to that point even if in some years it doesn't materialize.  

Markets move in fits and starts.  They ebb and flow just like a river, not only with the seasons but also with all the millions of data inputs that find their way into them each day.  We have seen a substantial move in stocks over the past 18 months. We may or may not hit a rough patch over the next few months but if we do, and based on what we currently can see on the economic horizon, it should be viewed within the normal patterns of a secular bull market and a potential buying opportunity.   Nothing so far is changing my view on that.

Back Thursday.  I will not be writing next week and my next post will be sometime after Labor Day.