For some time now we have stated that we believe we are in a secular bull market. To remind you, a secular bull market is one in which the long-term market is increasing but that along the way there are pullbacks. These pullbacks are what are known as market volatility.

Since the election we have seen positive market movement and with over six months of positive performance we are now in seeing some pullback. This gives a chance for the market to cool off. When we have a long-term mindset of an upward moving market these pullbacks are viewed as buying opportunities versus a time when we should get more defensive.

We believe this pullback is more seasonal as the market seems to under perform in August and September. There is not a noticeable change in the overall market conditions that have led to the market performance over the last year. This was presented in the last economic research dated August 10 of 2017 by Scott J Brown, PhD. In his writing the following was presented:

  • Recent economic data have remained consistent with moderate economic growth in the near-term.
  • Federal Reserve policymakers continue to expect that economic conditions will warrant a gradual pace of increases in short-term interest rates. (i.e. economic conditions continue to improve)
  • Physical stimulus through increased infrastructure spending program or major tax reform, looks doubtful but lawmakers may still lower tax rates in the months ahead

So even though the upside may be limited our short-term cautious stance is still in place until we clearly see a bottom without getting too bearish at this stage.

These are opinions of William Bowman and not necessarily those of Raymond James.