The Bulls are Back! Should we be Concerned?

 

It’s always an uneasy feeling when it seems all is well, and we only see blue skies ahead. Sentiment may have shifted too heavily into the bullish camp in the near term, but that is only in the short term. The Federal Reserve’s recent rate cut of ¼% has given the market bulls a shot of adrenaline.

 

            Looking beyond the short term, the bulls have a number of positives working in their camp. The feds have indicated that in addition to this recent rate cut there could be two more cuts before year end. Corporate earnings continue to be strong with 82% reporting higher than expected earnings this last quarter (highest number in 4 years). Employment may have recently slowed a bit, but it still remains strong and stable. Inflation remains low and stable, which not only keeps interest rate down but also helps consumer confidence and business planning.

 

We continue to hold the belief that we are in a long-term bull market with short term corrections or cyclical bear markets along the way. Success comes from owning companies with strong earnings and healthy balance sheets and holding for the long term. At times it can be tempting to try and time this market by getting out at the top and back in at the bottom, if it was only that easy. The old axiom still applies “success comes from not timing the market but time in the market”.