The S&P 500 hit record highs in the second quarter amid continued volatility.
Via Nova believes the U.S. economic expansion will achieve a new longevity record in 2019, and corporate profits will rise, creating a favorable environment for higher stock prices.
While much is made of the market adage to “sell in May and go away,” the S&P 500 gained 7.76% between Memorial Day and Labor Day, highlighting the risks of blind calendar investing.
We believe the facts of a healthy economy and strong earnings growth justify a bias in favor of equities and away from bonds. However, less accommodative central bank policies and the potential for a trade war are tangible threats to an otherwise positive outlook. Caution, not fear, is warranted.
- Overall outlook for 2018 is positive as the economy continues to recover and grow.
- Risks include unexpected increases in inflation and faster-than-expected interest rate hikes.
- Bonds may become a less desirable investment.
- Near-term stock market weakness likely a buying opportunity.