Markets Have Been Strong, But Narrow Focus Is Worrying
After Trump’s election, when US equities markets took off, world markets followed suit. While being in US equities has been a good play, it hasn’t done as well as world indices, Griffiths pointed out.
‘When I rank them all into my quintile system … right in the top quintile is the world index,’ he said. ‘Passively holding the global index is quite hard to beat.’
There are markets beating the global index, however: China, India, and emerging markets. Britain, American, and Japan are in the second quintile, he noted.
While investors in the US have done well, it’s likely they could have done better elsewhere.
Additionally, American equities are being held up by a few blue chip stocks. These are the FANG stocks: Facebook, Amazon, Netflix and Google, and other tech stocks. That’s where most of the action has been. Broader indices aren’t as strong.
‘I’m a little bit concerned that the focus is too narrow at the moment,’ Griffiths said. ‘It doesn’t alter the fact that the trend on the chart is definitely upward, though. … We have to go with the trend, yes, but it’s going up, so it’s going to get more expensive.’
1987-Style Crash Possible?
While he doesn’t recommend fighting the uptrend just because it’s expensive, Griffiths does recommend caution. He thinks we should be all right through the end of July.
This post was published at FinancialSense on 06/21/2017.
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