The U.S. stock market had another strong month extending the bull market of the past couple of years. In fact, the strength has been so great one of our bigger concerns is sentiment. Investors are feeling more optimistic. Often when that happens the market gives them a reminder that stocks don’t only go up. Despite those concerns we are not quite turning our sentiment dashboard to the caution red this month, but it is on watch to do so.
Since the election the U.S. Dollar and interest rates have surged higher. Is this a result of expectations for higher growth, or concerns about future policy triggering a new wave of inflation? Sound arguments can be made for both and as always it is nearly impossible to predict the future. Instead, we will maintain what we believe are diversified portfolios positioned to enjoy much of the upside should the bull market have much further to run. At the same time, we will strive to focus on risk management and the client’s appropriate asset allocation for their particular situation and risk tolerance.