"Beats Me!"

A former chief investment officer at my prior firm (you know who you are!) was one of my favorite market commentators.  At client meetings, he would talk for a good 30 minutes about the economic and capital market issues of the day.  Usually there would be a good mix of positive and negative characteristics to end up with a balanced presentation of the current situation.  At the end of each presentation, and he always did this, he would close by saying, “so, what is the market going to do?  Beats Me!”

I am quite comfortable saying the same thing today!  Plenty of good news and plenty of bad news.  It certainly seems like a great time to buy dividend paying equities since the S&P is currently paying about 2% (and high dividend equities are over 3.5%) which is much higher than the 10-year Treasury at under 2% (1.76% as of August 5).   See my blog post dated Feb 27, 2019 for more detail on this topic ( https://www.dattilioash.com/our-blog/2019/2/27/dividends-and-treasury-yields).  Plus, qualified dividends are a tax-advantaged investment compared to bond interest.  But, there is a huge overhang of market stress due to the escalating trade war.  And, weakness in other global economies. Etc., etc.

As I am wont to say, plenty of reasons to be cautious, but no reason (yet!) to run for the hills.  New money should go into the market slowly, since that is ALWAYS the low risk approach to get market exposure.  Investors with a long term strategic approach properly diversified and positioned in the risk profile appropriate for their situation should stay the course.