The recent headlines in the financial press would lead one to believe that the market is in a middle of a monster wave. In fact, if you look at a chart from the beginning of the year, it does look like a monster wave.
If you expand the horizon a little, the market doesn’t look as much like a monster wave but a lot of chop. The chart below starts at the beginning of calendar year 2018.
Jeff Gundlach, chief executive of DoubleLine, argued last month that the market is in a bear market.
The US market isn’t the only market in a lot of chop. Large Foreign stock as represented by the MSCI EAFE has not regained it’s high set in January of 2018.
Emerging Markets represented by the MSCI Emerging Markets Index has not regained it’s peak of January 2018.
The market that has really surprised everyone is the bond market.
With a potentially disappointing first-quarter earnings season upon us we could continue to see more of this. With valuations far ahead of fundamentals, prudent, long-term investors should continue to limit their exposure to volatile asset classes.