So a Bull and a Bear Walk Into a Bar…

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After two bull and two bear market cycles, the S&P 500 is now 51% above its 2007 peak.

Sure, if you can avoid a bear market by selling before the big downturn you look like a hero. But if you in fact bail on a bull market, you look like a zero. And it could be very detrimental to your portfolio. An opportunity cost is still a cost. The latest bout of trade tensions and some misguided talk of global slowdowns have led investors to lean bearish. Who can blame them? Tariff talks, geopolitical on again, off again summits, emerging markets’ ability to navigate a stronger dollar and the ever-looming Fed at the rate hike trigger may seem pretty ominous. Time to remember your ABC’s. Corporate earnings are ACCELERATING. Estimates for 2018 profit growth have been raised to 19.5% from ~10% in December. Manufacturing is BROADENING. ISM manufacturing and non-manufacturing accelerated in May and CAPEX surged in Q1 by 9.2%. CONSUMERS are spending. And why not? The jobs market is the best in more than 18 years with 3.8% unemployment and 6.698 million job openings (JOLTS). Using a disciplined approach to manage your portfolio, based on fundamentals, is a two way street. The fundamentals can indicate when the bear is growling but more importantly - investors need to heed the fundamentals when the bull is running especially when day-to-day distractions may obscure the view. The market dropped 52% from 10/9/2007 to 11/20/2008. Ouch. However, the S&P 500 index is up almost 300% since its lowest low. Bailing on a bull market may be bigger mistake than failing to outrun the bear. Please see page 15 of the Global Perspectives book for a breakdown of the bull and bear market returns.

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