- There is a powerful underlying bid in this market. Are investors chasing performance as they reallocate from low risk to high risk assets into year-end or is there something more nefarious going on here?
- Are we going to follow the 2003 script into year-end? The S&P rallied almost 5% in the final month of the year after a steady climb throughout 2003.
- The rally at this point appears to be entirely dependent on a weaker dollar. So let me get this straight: investors want to sell dollars because they are certain that the U.S. government will maintain a fiscally irresponsible policy approach for years to come and yet these same investors believe it is prudent to purchase equities with some portion of this dollar funded trade? That sounds oddly similar to what investors in Japan did in the early 90’s. How did that end? This falling dollar, rising stocks trend is not a sustainable trade or growth strategy.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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