CIS Portfolio Update
So summer is over and markets will perhaps make more meaningful moves as traders return from the beaches. The last three months were not that special, with August being the worst of the three with a -2.76% return from the FTSE All Share. The CISP did better than this by falling less, although this was offsetting a smaller lag behind which it saw in July. This now leaves the Portfolio up by just over 5% YTD versus a flat market, so OK but no cigar. As far as the monthly screening goes, quite a few potential trades came up, however with it being based on limited news flow in August I decided to skip doing any trades this month to save on unnecessary turnover as a number of them seemed quite marginal. Monthly Timing Indicators for UK Markets & general comments. On the Monthly timing indicators that I produce for the UK market, these all remained in positive territory, albeit less positive now after the falls in August. Similarly the economic indicators also still suggest a positive outlook is appropriate, although there too there are just a few signs of things may be coming off the top in the short term. So it would seem, despite the wobbles in the market over the summer and the on going worries about BREXIT & trade wars that it is probably still worth remaining invested in equities. I have to admit though that it is all starting to feel a bit late cycle given how long this recovery has been going on and given the fact that the bull market from March 2009 is now reaching a record duration too, although there is some debate about this depending on how you measure it & corrections that have occurred along the way in various past bull markets. It has to be said though that bull markets don't just die from old age it is usually caused by the Fed tightening monetary policy, which is exactly the phase we are in, although thus far they don't seem to have slammed the breaks on sufficiently to stop the market in its tracks. Indeed sometimes you do get a final euphoric run up which then sets the market up for a fall when the good times end. With all global central banks now moving to a tightening bias & starting to withdraw the stimulus that was put in place post the global financial crisis, it remains to see how markets will cope with that. A couple of other things that made me think about this recently was firstly a snippet in Money Week about Warren Buffet and also the stats on the amount US investors have in equities versus cash (see pictures below). Neither of which are particularly bullish, but equally not a reason to rush out and sell all your equities either. Just pointing out that things have been good for a long time and at some point, may be in the not too distant future , things may cut up rough so just be careful out there and don't get carried away.
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