Equity Market Commentary - September 2019

septembre 25, 2019

In this slow-grinding economic cycle, markets have experienced a series of “recession scares.” Yet the Applied Equity Advisor team is not in the recession camp. Andrew Slimmon maintains that the U.S. stock market will break out during the fourth quarter of 2019, with the S&P 500 ending the year well north of 3,000. This is despite the fact that the current market is range-bound and a level of fear is palpable. As was the case in Q1 2009, fund flows are currently negative, sentiment figures are dour, and the valuation spread between the perceived “safe” and cyclical stocks is hugely distorted. Sentiment is consistent with a bear market low, not a bull market peak. But in 2009, the market exhibited a significant recovery despite the negativity, and Slimmon expects similarly at the end of 2019. However, the inverted yield curve should not be ignored, an indication of potential problems for the economy in 2021.

RISK CONSIDERATIONS

There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and may therefore be less than what you paid for them. Accordingly, you can lose money investing in this portfolio. Please be aware that this portfolio may be subject to certain additional risks. In general, equities securities’ values also fluctuate in response to activities specific to a company. Stocks of small-and medium-capitalization companies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. Investments in foreign markets entail special risks such as currency, political, economic, market and liquidity risks. Illiquid securities may be more difficult to sell and value than publicly traded securities (liquidity risk). Non-diversified portfolios often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility.

Andrew Slimmon

Head of Applied Equity Advisors Team

Equity Market Commentary - September 2019

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