Investors who have been waiting for a downturn to get into the market may be frustrated by its current resilience. Our first article this week focuses on comments by the Chief Investment Strategist for Charles Schwab, who says that the pattern of past pullbacks isn’t necessarily a prologue in today’s markets. For those who’ve been hearing bullish statements that “this time is different”, we turn to the comments of Lance Roberts, who cautions, “There is no doubt that the current advance is quite amazing. However, it is not unstoppable. It will eventually correct.” Our last article looks into Germany’s policy turnabout from austerity to economic stimulus. Will the rest of the European Union follow its lead?
Remarkable Resilience– While it may seem like we’re due for a correction, defined as a 10% pullback, as the most recent one based on the S&P 500 was in the middle of 2011, history doesn’t tell us that it’s inevitable in the near term. This is according to Liz Ann Sonders (Chief Investment Strategist) and her team at Charles Schwab & Co. http://www.schwab.com/public/schwab/resource_center/expert_insight/todays_market/recent_commentary/schwab_market_perspective.html
Evaluating 3 Bullish Arguments– As the markets elevate higher on the back of the global central bank interventions it is important to keep in context the historical tendencies of the markets over time. It is not uncommon at major market peaks to see “irrational exuberance” begin to grip the markets. http://advisorperspectives.com/dshort/guest/Lance-Roberts-130528-Evaluating-3-Bullish-Arguments.php
Germany Drops Austerity And Embraces Eurozone Economic Stimulus– In sudden policy reversal, Germany abandoned calls for austerity and is backing plans to spend billions on revitalizing the economies in Southern Europe. Germany plans to dramatically expand lending and investing in financially stressed eurozone countries, using its own capital, rather than waiting for the European Commission to take the lead. Germany’s efforts will first focus on Spain.
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John R. Day, Bill Ennis and Stephanie Davidson