The Endless Search For More Knowledge About Personal Finance, Wealth Management, & Investing.
Joshua Street

Market Commentary

Investing No Comment

Key Observations:

  • Many investment markets have become quite choppy over the past few months, starting with the spike in volatility in February.
  • As many markets have experienced pullbacks since they peaked in the end of January, the long-term valuation measures have become slightly less pessimistic, though we are still in quite an overvalued state at the moment… Looking at the long-term valuation measures, we can expect that returns over the coming 7-10 years will likely be muted when compared to the strong returns we have experienced in recent years for most asset classes.
  • Long-term measures of momentum still show a bit of positive momentum for stock markets, but the recent choppiness and pullbacks since January’s highs are surely reducing the strength of these positive momentum signals. All strategies have periods when they are out of favor, and this just might be the time when indicators of long-term momentum do not work well – especially if this is an inflection point when some asset classes may be shifting toward no clear trend or possibly negative momentum.  Only time will tell whether momentum continues to decline in the coming months as valuations revert toward the long-term mean.

Source: Morningstar Direct daily total return data for SPY, EFA, EEM, AGG, TIP, DBC, GLD, & ICF

Source: Morningstar Direct daily total return data for SPY, EFA, EEM, AGG, TIP, DBC, GLD, & ICF

Source: GMO 7-Year Asset Class Real Return Forecasts, Research Affiliates Asset Allocation Interactive Data

Source: GMO 7-Year Asset Class Real Return Forecasts, Research Affiliates Asset Allocation Interactive Data

Related Posts

Leave a Reply

Student of Finance

The broader finance industry is constantly evolving and providing new challenges for practitioners and end users alike. Acknowledging this fact, the best way to effectively manage your own finances and the finances of others is to become a lifelong student of finance. Josh Street created the Student of Finance blog to share relevant and timely topics that are related to financial planning, investments, and managing wealth.

Subscribe to our mailing list

* indicates required

Categories

Disclosures

The commentary on this website reflects the personal opinions, viewpoints and analyses of Joshua Street and should not be regarded as a description of services provided by his employer or its affiliates. The opinions expressed in this website are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide general education about the financial industry. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Any indices referenced for comparison are unmanaged and cannot be invested into directly. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.