Exit or Seek Opportunity

Exit or Seek Opportunity

Recent turmoil in financial markets, rising pessimism about Chinese and emerging markets growth and a renewed slump in oil prices have fueled fears that the global economic recovery is faltering. While the world economy does face several challenges, we remain convinced that the United States and Europe are on an upward growth trajectory. China is a wildcard, but while growth is slowing there, it should stabilize.

We do not foresee current equity market weakness morphing into a bear market. Bear markets typically occur against a backdrop of recessions that produce significant declines in corporate earnings. Earnings have wavered this year, but we believe this is mainly due to a profit crunch in the energy sector and the sharp rise in the U.S. dollar. The negative impact of both of these factors should fade in the coming quarters, allowing earnings to improve. Additionally, monetary policy should stay accommodative even when the Fed starts raising rates. If the Fed were only focused on the health of the U.S. economy, a rate increase would be a foregone conclusion. But overseas growth and market turmoil make the case more difficult. Unless markets are rioting, we expect the Fed will enact a 25 basis point increase this month while offering a number of dovish caveats. We think valuations are reasonable for equities, which leads us to retain a "pro-risk" investment view. Volatility is likely to remain elevated in the near-term, but we expect the bull market will resume, leading equities to reach new highs at some point over a six- to twelve month time horizon.

We are here, as always, for questions or concerns if you would like to speak with us feel free to reach out – as a reminder we are now officially in our new office in Suite #5 – and can be reached at or by phone at 209-636-4931. 

Mike's "Rule of Thumb"
"Don't Panic"


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Friday, 22 January 2021

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Due to renewed State orders for shelter-in-place we will be modifying our office operations. We will be suspending services at our physical office for the public. However, we are available to you via web meeting (zoom), email and telephone (Phone lines have been forwarded to our personal cell phones) during regular business hours. We will be able to fully service all your investment needs with no interruption.

You may drop contribution checks at our office through the mail slot or they may be mailed directly to TD Ameritrade (address listed below). Please be sure to notate your account number on the check.

TD Ameritrade
PO BOX 650567
Dallas, TX 75265-0567

Rest assured that we will continue to monitor your investments and market conditions on an ongoing basis with no interruption. Should you have any questions or concerns please feel free to contact us.

We will navigate this crisis as best we can, coming together and making shared sacrifices. We hope that we can help to slow down the effect of this virus together and solve this swiftly. We also wish everyone well and would like to extend our gratitude for your patience during these trying times. Continue to watch for updates from us.