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Monday, 9 September 2019

Emerging markets to the fore

US stocks: complacency?

Disclaimer: no advice here, as I don't know your personal circumstances etc. 

After a bit of a panic at the end of last year, US stocks have recovered most of their lost ground and remain very expensive. 

People smarter than me - namely my colleague Stephen Moriarty - believe that we're now in the complacency phase of the stock market cycle.

This follows the euphoria of 2017 when markets simply went north by the month, and everything was apparently booming, including cryptocurrencies. 

At the sectoral level, it's very difficult from my perspective to see value in US stocks, even in the most unloved sectors. 

A lot of time and energy is expended trying to predict what will cause the next downturn.

But the specific trigger is almost by definition always unknown - something unexpected will come along and then investors will be piling out together. 


Some personal disclosure, in case you were wondering: I'm more than 50 per cent in cash, although I do still have some exposure to Aussie shares. 

Successful investing is about protecting capital through the cycle. 

I am still actively investing in ETFs, but now mainly in emerging markets, rather than developed markets (and I have no US market ETFs in my portfolio at all). 

Emerging markets generally are relatively far more attractively priced, and appear to be safer than expensive developed markets. 

US recession

There's been a lot of talk about a bond bubble and a possible US recession.

It's impossible to predict, but I spun through the latest US jobs figures here

On the one hand the yield curve has been flashing red; on the other hand there's not been much sign of inflation or runaway earnings, so there's room for the Fed to cut interest rates, and significantly if needs be. 

And there's certainly no shortage of easing around the world right now!

Could be an interesting year or two, one suspects.