This is the latest in a series of columns about portfolio strategies, financial planning and asset management.
High stock prices, worrisome headlines and occasional market volatility haven’t swayed Carson Group’s chief market strategist from his bullish stance.
Ryan Detrick recently weighed in on the most important forces and trends affecting the market — offering reassurances, despite various pressures.
“The economy is in much better shape than many realize and we have seen very strong earnings justifying this rally,” he told me in an email exchange.
“Forward 12-month earnings are at a record high and profit margins are at new cycle highs. The reality is that (the) recession so many promised us a few months ago isn’t happening and we expect to see continued better times coming over the next few quarters.”
That doesn’t mean that the market doesn’t face risks or hit rough patches, something he suggests that investors keep in mind.
“After a five-month win streak, investors need to remember things don’t always go up,” Detrick said. “We are due for some usual October volatility and should that happen, we are stressing not to panic. Use it as an opportunity to add to likely a strong fourth quarter.”
Advisors need to remind clients to tune out the doomsayers who for years have been "making scary headlines for clicks," he said.
“There are always worries or concerns, but one of the biggest for an advisor is keeping a client properly invested in a bull market,” he added.
Detrick dismissed concerns that the stock market is experiencing a bubble.
“We’ve heard lately this is a bubble and some have even said we are in 1929. No, neither are true, which is the good news. Valuations are a tad high, but this is mainly due to technology and communications,” he said, referencing the so-called Magnificent Seven mega-cap tech stocks in the S&P 500.
“Yes, those areas have been most of the growth, so you have to pay up for them. At the same time, the 493 is modestly valued, while areas around the globe are still quite cheap. If you don’t want to own U.S. large cap tech due to valuations, there are plenty of places you can find some nice values out there.”
The chief market strategist cautioned against letting political volatility affect investing decisions.
“No, political concerns shouldn’t ever impact your investments. We’ve been hearing for years now how Trump, or Biden, or Obama was going to wreck everything, but it was never true. The truth is to remember to keep your political beliefs separate from your investments. This is so hard for many, but those that have done it have been handsomely rewarded,” he said.
“Politics get emotion out of investors, but we’ve seen way too many investors make some very poor decisions based on who was sitting in the White House. We can’t think of many times politics moved markets for more than a few days. Yes, Liberation Day did, but we now see that was another huge overreaction.”
Detrick added that “we’d rather focus on things like earnings, interest rates, Fed policy, and overall market trends than try to invest based on anything that ever comes out of Washington.”
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.