The markets are due for a correction and 7-10% is quite possible at this stage, but like pruning a tree to keep it healthy or going to the gym and experiencing pain is considered healthy, a correction is too.
We are seeing evidence of the rebounding of the economy, but at this point, our thoughts are that the markets have already priced in the recovery on the vast majority of equities. Does this mean that we cannot or will not see continued growth of the market conditions?
Bank Of America’s Global Research stated that the number of mentions of “inflation” during the earnings calls has more than tripled year over year. We are seeing a tug-o-war between those who believe this inflation period will be transitory and those who believe it will be long term.
The Mutual fund portfolios saw the largest rotation we have ever seen from the best of category to the back of the line, resulting in numerous new names and fund families this quarter.
Debt repayments are increasing, meaning most people are focusing on paying down their debt at present.
In our investment calls this week, Tyler and I spoke about a number of topics from adding holdings to our strategies, to reducing equity exposure in Biotech to being patient in the rebalancing of accounts or adding new cash injections. We have been here before, where we both agree that the market cycle is entering into or is already in the 4th quarter where we feel a shift unfolding.
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