I hope you’re having a good summer. Aside from the typical (for July) heat and stifling humidity, things are going very well for Signature Wealth Strategies. Along with the high temperatures, stock prices are hitting new highs, which makes just about everybody happy. According to our Director of Portfolio & Technical Strategy, Mike Gibbs, the S&P 500 has printed a new all-time high in seven of the last ten sessions. He reports that earnings releases from several high-profile companies have been better than expected, and have provided a nice tailwind for equities. If the rest of earnings season produces similar results, the equity market should be set to have a positive bias. The equity market remains overbought; but with the underlying momentum strong, it can remain so for an extended period of time.
In our discretionary accounts, we put a lot of money to work around the Brexit. However, after the rally following Brexit, the stock market looks fully valued to me (if not overvalued by many measures,) so corporate earnings will need to grow in order to produce sustainably higher stock prices. There are some attractively priced stocks, especially in consumer discretionary, technology and healthcare stocks. However, many utility stocks, telecommunications stocks and consumer staples stocks look overpriced. It is my opinion that a bubble is building in utilities and consumer staples stocks and that those stock prices will not be able to keep up with the lofty expectations that investors have placed on them. I think profit taking is prudent in those areas. I believe that the stock market is overpriced, and we will likely see a flat period for the S&P 500 over the next few months, or perhaps even a pullback. Again, I think selling some stocks that have risen a lot is a good idea (or perhaps selling partial positions.) On the other hand, I suggest buying attractively-priced stocks selectively, but on pullbacks.
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As always, these recommendations are mine, and may or may not be the same as those of Raymond James. This is not a solicitation to invest, although we do invite you to review your portfolio with us to see if any changes should be made. Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur. Investing involves risk, including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Scott Mitchell and not necessarily those of Raymond James. Signature Wealth Strategies is an independent firm. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC