After a steep rise in June and July, August has seen the market pull back. The Dow even showed declines in 13 of 16 days at one point earlier in the month. It is our view that this is a healthy pull back and not the start of a major decline.
With the mild decline in the markets, we saw investor sentiment and positioning quickly turn negative while the S&P 500 stayed above the 4300 level that has been an important level since last spring. Meanwhile interest rates tested their highs from last October before reversing late in the month. Falling, or even flat, interest rates can help support the stock market. At the same time, there is still evidence pointing to a potential for an economic slowdown, this concern can cap the near-term potential upside for stocks. It is still our view that investors should have a little less risk in the portfolio than normal and avoid making any outsized bets. As the markets work through all of the current events, we feel there will be opportunities to selectively deploy cash within portfolios.
It is times like this that the team at CSG Capital Partners takes great pride in having a defined investing process to help guide us through these markets. It allows us to be objective and remove emotions from clouding our short-term horizon.
