Where From Here?

July saw world stocks reach new heights, exceeding the expectations of many investors. The S&P 500 experienced its strongest first six months since 1997, while the global market had its best first half since the 1980s. This upward trend can be attributed to the sharp, V-shaped recovery from the Q4 2018 correction, which we had accurately predicted. The markets are behaving as expected in later-stage bulls, with continued volatility being normal as markets don't move in straight lines. It's worth noting that larger stocks, with a market cap of over $200 billion, are outperforming smaller, lesser-known companies. This is typical of late-stage bull markets as small-cap stocks tend to perform better in early-stage bull markets.

Many are wondering if the market has finally peaked as it consolidates around the psychologically important 3000 number for the S&P 500. However, this is unimportant. Despite investor pessimism, this bull market is actually the most hated in history. The media dominates with grim headlines as they know that fear sells better than "nothing is wrong." Investors have a lot to worry about, including US politics, Brexit, Iran, oil, the inverted US yield curve, tariffs, and a weak global economy. However, we believe that none of these factors have the power to end this bull market, either combined or on their own. As we wrote in April of this year, these headlines lack the power to derail the market's climb as the market is almost a perfect discounter of all widely known information. The economic backdrop continues to look positive for stocks with low interest rates, inflation, and moderate growth, all indicating a solid footing for businesses to innovate and thrive.

Although we have remained bullish throughout this bull market's ups and downs, we are aware of the risks. We know that this historically long bull market will eventually come to an end or get knocked off course by some unforeseen negative. We are actively monitoring the global political climate, the investor landscape, and the global economy daily. While we can't say exactly when this market will end, there is little evidence to suggest that it's now.

Nothing herein is intended to be investment advice. Investment in the stock market involves risk of loss. Past performance is no guarantee of future returns. The content contained in this article represents only the opinions and viewpoints of the Interlaken Advisors editorial staff.