July 2017 Word from Jeff

As we float on up to midsummer, not much has changed in the investment landscape, as US stocks continue to defy gravity, and the business-as-usual quagmire in the swamp that is Washington. Camarda still believes that US stocks are overvalued, and that a sharp correction is coming before growth strongly resumes. We also think that stocks in most of the rest of the world are far cheaper. Camarda is far from alone in this opinion, with many if not most market pundits expressing a similar view.

So why the continued market afterburners, well past the sage “sell in May and go to the beach” deadline? Even with the headwinds of a resolutely tightening Fed, the fading hope of tax reform this year, a shaky kill Obamacare Senate profile, and the unveiling of a Presidential FBI investigation? Well, there is some good news, after all. The job picture is as strong as it’s been since my mid-life crisis, which has been long enough ago that I wonder what the fuss was about. Households and businesses are spending freer, and injecting more into the economy, driving profits for companies. For this and other reasons, corporate profits are trending strongly up, and not from to the bone cost cutting anymore. The world economies are still recompressing from the worst depression since the Great Depression, with plenty more potential upside around the globe. A market untethered from fundamental valuations can soar long and strong on such updrafts.

Those invested should hold tight, expect some bumps, but anticipate a long continued bull market after we see a healthy correction. For those in cash, consider dollar cost averaging in, especially into value stocks, and most especially into non-US stocks.

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