Below we examine current market conditions.
Majority opinion is calling for a correction or using the industry’smost over used term, “overbought.”
The current street banter seems to center on the theme equities are’, . ,significant correction when everyone is talking about how “overbought” the market is or how stocks are way “tooextended.” We find it hard to believe that after hiding under a rock for nearly five years, that a few months of equityinflows means investors have gone from petrified to exuberant. That process in our opinion is a longer arc, not asingular event. While clearly markets can and will have pullbacks. We think the overbought chatter comes from
.As evidence to refute these claims of speculation, we look at historical mean allocations to equities. Currently equityallocations, are still below their 26 year mean of 60 %. If investors are giddy, and speculation is rampant we wonder,how can allocations to equities be below their mean ? A corrective wave will come at some point, maybe brought on. . , ,as is presently the case, it typically doesn’t come. Hence the phrase the market rewards the minority and confoundsthe majority.Market internals remains strong, and robust fund flows into equities suggest the liquidity back drop will remainsuppor ve o equ es. ona y we expec e ro a on away rom xe ncome n o equ es, w eep aunder the market for stocks, thus we remain constructive on the markets at present – even if we are overbought !!