We’re more than half way through the year which means that all of the investment firms are presenting their Mid-Year Outlooks on the market and the economy. The message has not changed much because the fundamentals have stayed the same, from a relative standpoint. Among many other positive factors for US companies, favorable policies remain: fiscal policies (taxes, government regulation), and monetary policies (Federal Reserve rates). Trade tensions are a concern of course, but seem to be moving in a direction that will avoid long-term issues.
Along with this condensed report from LPL Financial which mirrors the input of most firms, I’d like to share a thought presented by a JP Morgan analyst that I follow because I think it addresses what is on the minds of many clients. When responding to the “impending” massive correction that everyone seems to always be waiting for (going on 10 years now), he noted that without financial excess in the markets, there is not a bubble to burst. The growth numbers that we have been seeing are not out of line with historical numbers and we are certainly not seeing the “Boom” periods that have predicated other major corrections in the market. In short, to correct an excess, an excess must exist. An extended period of low rates and high government debt have been portrayed as possible excesses, but these conditions have been with us for over a decade now which is far different than the usual unexpected elements that have preceded most corrections and recessions.
As always, the most important piece in regards to long-term investing is to have a plan in place that can be adhered to even through economic recessions and the ups and downs that will always be experienced in share prices.
Hope that you find this helpful!