Some great insight from a well respected technical strategist here at the firm. Sentiment shifts markets in the short term. Numbers move markets in the long term. This should give us something to talk about
There is always much to worry about when you consider the news of the world that is so readily available so easily to everyone. But there always has been much to worry about and we think there will likely continue to be much more to worry about in the future. It’s human nature to look for things that may upset life as we know it, but most of that doesn’t have an effect on the stock market except in a very short-term nature. It is a challenge for the media to come up with a reason for the short-term fluctuations in the market as it is presumably news that everyone wants to know. But it is really the longer-term trends of earnings and sentiment that drive stock prices and the anticipation of those trends in the future. Last year’s strong move in the markets was likely the anticipation of this year’s much better earnings trend, which has been the best earnings growth season in more than 10 years. The earnings forecasts for 2019, which is now just four months away, are generally in the single-digit range, and we suspect the stock market performance going forward will begin to reflect these more modest expectations soon.
Fairly profound, and even more impactful if read more than once. Let's talk about it.