Thursday, October 12, 2017

This Week's Message: Again, How on Earth??

Regular readers now know this Jesse Livermore quote all too well:
"Not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear market when conditions are bearish. And all a man needs to know to make money is to appraise conditions."
This is the one I've heard myself repeating most often during client review meetings of late -- given the relentlessness of the geopolitical risk-related headlines. The process involved in "appraising conditions" is how we here at PWA spend a great deal of our time. 

We've made it a practice to periodically update readers on what we're finding/thinking as we assess the present economic state of the world. And while people smarter than yours truly seem to be scratching their heads in disbelief regarding the fundamental underpinnings of the present bull market, yours truly's view of the data suggest that the market's present naysayers simply aren't looking at the data. Or, maybe their concerns lie in the prospects for market corrections, as opposed to all out bear markets. 

The latter I can absolutely sympathize with. The best of market/economic setups will forever experience multiple stock market corrections (we'll say 5% to 20% draw downs), but those aren't the inevitable events long-term patient investors concern themselves with. They're concerned with maintaining an asset allocation that is consistent with the signals sent by a robust array of data points as they navigate toward, and through, the inevitable bear markets (we'll say 20%+ drawdowns that linger for at least several months) to come. 

If you find yourself pondering how on earth the stock market can hold up against all of the emotionally-pounding headlines, remember the Livermore quote above. Our observations over the past 3+ decades, and our back-testing of the data we track (per recent commentary here and here), says the great trader knew what he was talking about.

The to-date entries into our October trends file (along with data samples like those found in the two links immediately above), support the notion that present (always subject to change) global conditions remain on balance bullish:

Click to enlarge...

Shoot me an email if you'd like to see the contents beneath any of the above titles. 

Have a great weekend!

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