Economic Data Still Makes Case For Stocks by Todd Sullivan, ValuePlays
Economic data speaks volumes! It indicates that investors should weather any volatility till the data tells us that the economy is peaking. Investors should not pull the trigger on portfolios ‘til’ we see the whites of their eyes’. The BLS Job Openings data in the chart below indicates that we remain at a solid point in the cycle.
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The past 5yrs has shown many investors frantically trying to avoid one disaster after another or take advantage of reported short term economic upswings. My guess if past history is a useful guide, traders have not done very well. It is always best to keep in mind that Hedge Funds are responsible for most of the trading these day, as a group they control ~$3Tril in assets which they routinely leverage to as much as 10 fold or potentially as much as $30Tril in a global market in the range of ~$100Tril. That adds up to a tremendous amount of market pressure if they suddenly shift market positions. Hedge Funds have not done very well relative to those who stayed the course the past 5yrs.
In my opinion, June 2014 saw the beginnings of the reversal in the ‘hyperinflation’ fears which Hedge Fund managers discussed heavily in 2010-2012 as the Fed implemented various ‘economic stimulus’, efforts.
But, economic data speaks volumes! It shows that the major influence of market trends that of economic expansion remains in place. Job Openings remain in a strong and perhaps even an accelerating uptrend. Nothing bodes as well for economic expansion as up-trending employment. Continued positive economic reports eventually turn stock prices higher. This is our history. We have enough history behind us to be able to trust the market forecast economic data provides.
Stay the course, buy more stocks if possible (SPDR S&P 500 ETF Trust (NYSEARCA:SPY)) (Dow Jones Industrial Average (INDEXDJX:.DJI)), be wary of bonds!