Market View – Time to be All In

The markets have shaken off the effects of politics and global turmoil and have once again taken off into new bull market territory. As it should. The Recent news bodes well for a continuation of growth in corporate earnings, which should fuel the market’s continued rise.

In addition, President Trump and Senate Majority leader Mitch McConnell held a press conference reiterating their commitment to getting tax cuts/reform done by year’s end. The parade of optimism regarding tax cuts is energizing the market. While politicians will debate the pros and cons of tax cuts, as an investor, make no mistake about it, a tax cut will add fuel to an already growing economy. The big negative; that should take years to play out, is that the Federal Reserve will face very little resistance to raising interest rates well into the foreseeable future.

  • Q3 earnings results are not only clear and present, but results are better than expected among most household name stocks. Goldman Sachs (GS) tore the cover off the ball, figuratively speaking. The Wall Street investment giant easily surpassed top and bottom-line estimates. This marks the fourth quarter in the last five that Goldman Sachs has beaten earnings estimates, for a 4-quarter trailing average of 11.6%.

    Morgan Stanley (MS) also beat expectations for both earnings and revenues. Investment banking revenues, in particular, grew 18.4% in the company’s Q3.

    Johnson & Johnson (JNJ), Netflix (NFLX), and United Healthcare (UNH) also beat earnings estimates. Pharma sales in the quarter grew an impressive 15.4% for JNJ.

    Economic numbers also add support.

    Crude Inventories decreased by 2.8 million barrels
    •       CPI, Core CPI increased by 0.1%
    •       Retail Sales increased by 1.6%
    •       September results for both import and export prices beat expectations

But always remain cautious. The stock market doesn’t raise a flag saying “I’m done, time to get out”! People lose money, lots of money in Bear markets because they are unexpected. Make a plan now, for both up and down markets…and stick to it!



2 Responses to “Market View – Time to be All In”

  1. 1 PJ October 23, 2017 at 1:07 pm

    Is it time to go Defensive Strategy in a Balanced Portfolio, I keep hearing the market is 2-3 years from a correction?

    • 2 Bill DeShurko October 23, 2017 at 1:32 pm

      The idea of a balanced portfolio is that it will weather all market conditions. More defensive would just be up to you and how you feel about your portfolio. We are aggressively invested, but I use market signals to move into more defensive positions as warranted. All I can say is that TODAY we are aggressive, who knows what tomorrow holds until tomorrow has come and gone!

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Charles H. Dow Award Winner 2008. The papers honored with this award have represented the richness and depth of technical analysis.


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