This week's ATW focuses on equity markets and their surge following Trump's come-from-behind win in November's Presidential election. A result so incredible that its only equal might be the comeback that the New England Patriots pulled off to win their unprecedented 5th Super Bowl win. And speaking of precedent, both links highlight the risks inherent in stocks, particularly at current levels.
Depending on the day, on average stocks are trading at 18-20 times Price/Earnings. The long term historical average is 13-14 times. What this means is that stocks are expensive. They were so before the Trump-win rally since November, and now they stand at all-time highs. What's more, stocks have not had a correction of any duration since the March 2007-March 2009 period. So we have two firsts: unprecedented valuations and an unprecedented Bull Market run.
Conclusion? Well, surprises do happen -evidenced by The Donald's electoral win and Brady's Super Bowl wizardry. But those were lottery tickets. Someone's gotta win, but don't bet your future on it. We remain convinced that equity markets are due for a correction, and when they do, our portfolios are well positioned to protect your hard-earned capital on the way down. Building and preserving wealth is our dual mandate. So forget the hype, the upheaval and sleep well knowing your retirement doesn't rely on a million-to-one turnaround to get you into your end zone.