As the end of the year approaches in Colorado Springs we’ve had very little snow. I’ve watered our lawn twice in the last week. Will the snow we hope for ever really come this season?
I’ve noticed the threat of winter weather typically forces people into one of three categories. First, you’ve got the “Meteorologist-in-training.” You know this person well. In fact, you may have one in your very own family. They have closely studied no less than three separate weather models. Wxrisk.com (or something similar) is definitely bookmarked. They use words like “system” and “nor’easter” and “squall” as they enlighten you on exactly how many inches to expect and precise starting and ending times based on their analysis. While this person doesn’t typically prove to be any more useful than your favorite Weather App’s push notifications, they do manage to be slightly more annoying.
Next is the “Boy Scout.” Living up to the “always be prepared” motto, this person is not going to spend much time trying to predict what will happen, but is also not going to be left without a replenished supply of bread, eggs, and milk. They’ll make sure they can find last year’s shovel and confirm the ice scraper is in fact wedged underneath the passenger seat in the car. They may even pick up some extra firewood, you know…just in case.
Last, we have the person that is always caught completely off guard. They’ve either chosen to ignore the signs and warnings for some reason or another, or they simply weren’t tuned in. As a result, they aren’t equipped to handle the outcome, and hopefully live next door to one of the “Boy Scouts” that will at least lend them a shovel.
If you think about it, the weather is not unlike the market. Both offer an infinite number of data points that can be analyzed, and many can (and have) made predictions on what will happen next. However, no one has the crystal ball. Sometimes no matter how clear the path may seem, the unexpected becomes reality, leaving even the experts scratching their heads.
The way people react to the market can also be looked at in a similar way. There are those that suffer from paralysis by analysis, using their resources to try to predict what will happen. On the other extreme, there are individuals that do nothing, falling in to the “buy and hold” camp not by choice, but by default. Our approach is similar to the Boy Scout mentality.
We don’t know what 2018 has in store for us, but what we do know is U.S. stocks continue to show a bullish picture as we wind up the year. We know it is sectors like Technology, Industrials and Financials are largely leading the charge. Most importantly, however, we know that we have several tools and indicators at our disposal that we monitor regularly. We have a plan in place that allows us to participate in leadership trends, yet remain adaptive enough to change should the market veer off course.
At this time of year LPL publishes their outlook for the coming year. If you’re interested in their latest views we’ve published the full report here.
I hope the last two weeks of 2017 and this season brings you great joy (and maybe some snow?)! If you have any questions, or would like to further discuss opportunities within the equity market, please give me a call.
Thank you for your business and support!
