I believe the US economy is finally, gradually, haltingly emerging from its drug-induced slumber.
So, what is my opinion on US equities? Neutral to mildly bullish.
The fact of the matter is that US equities are leading economic indicators. Unless you believe in momentum investing, which I don’t (see disclaimer), past market moments do not predict similar future market movements. To the contrary, from a value investing standpoint, sharp upward market fluctuations simply presage undesirable valuations. Or in plain English, when the stock market skyrockets, be cautious. That is why I’m not a fan of “plain English”; it is too untextured, abstract, and strangely foreign to my financial ear.
My opinion has very little to do with my asset allocation. In painfully plain speak, “I pretty much stay the course with my investment choices, no matter how I feel at the time.” In other words, I stick to a purposely pseudo-static asset allocation strategy with the empirically grounded assumption that impromptu reallocations increase standard deviations without increasing alpha.
I apologize for the last two sentences.
My opinion, for what it worth, is that I’m less certain about my bullish equity positions. Simultaneously, I’m quite bearish on US debt securities… like US Treasuries (or as the WSJ writes it, Treasurys.)
All said, I am have not significantly changed the holdings of Sigma1. Not yet.
Disclaimer: Momentum investing is, in my opinion, only viable on a scale of seconds or microseconds in terms of algorithmic or “high frequency” trading. In general it is a guise for other investment bets, some of which pay off and some of which do not.