At the end of January and beginning of February “risk was off” in the stock markets. World equity markets were in turmoil over the currency in Argentina and Turkey sovereign debt and China’s perceived GDP slowdown.
These issues resulted in a sudden worldwide equity sell off and market volatility. Active managers sold equities and bought U.S. bonds, increasing bond prices as equities moved lower.
This large equity sell- off and bond buy-in ended in just a few days and reversed course as equities rebounded. This rapid risk-off to risk-on move suggests that more managers actively manage risk and change equity/bond allocations on a time frame of less than a week.
In my opinion, I expect positive momentum for biotech, real estate, precious metals, and utilities. All style boxes have positive momentum with growth beating value. In my opinion, the markets of Germany, U.S., England, and emerging markets all have positive momentum.
We remain short bonds at this time. We don’t see a recession or bear market near.
DISCLAIMER: The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.
