Roberts Nash Advisory Group

Kelly's September Market Comment

Everyday I wake up and watch CNBC and the talking heads are discussing the financial markets.  I find it very interesting that I can watch CNBC and see so many different opinions. Many of these people are extremely successful at making money in the market and have completely opposite opinions on what's happening tomorrow, next week, next month, next year and the next decade.  The question is always, what to do now?

My opinion has certainly being right and wrong at different times.  With forecasting there is always a risk.  Since the end of 2009 I've been relatively defensive after the strong rally from the low in March 2009.  If you look at the charts below of the markets around the world defense since 2009 does not seem like a bad idea. However if you only look at the US market I've been totally wrong.  The red line is China, the white line is Emerging Markets, the yellow line is the US, The blue line is Canada and the green line is Europe.

That is why we diversify.  The next chart shows different markets and how they rank per year over the last several years.  Which market will be the best performer in 2014?  Usually it is a total surprise and what would be the biggest surprise looking at the news today?  Government Bonds!  I am not predicting that interest rates are heading lower but given the universal view that they are heading higher, this would be a huge surprise.

Generally we like to make sure that we participate in the long term upside of equities and their growing dividends.  However, we use strong rallies as an opportunity to reduce holdings.  Strong declines are opportunities to increase positions. I will always look at it this way.

Today, the economy could be picking up steam which would help corporate earnings and this in turn could help reduce the US deficit.  Maybe even China could start growing rapidly again. Then many of the world's debt problems would be solved and the equity markets would move higher.  However my concern is that interest rates are heading higher because of concern of credit quality. This is deflationary and does not help equity markets. Therefore we need to diversify, and we need to understand how to spot the differences.  Deflation is hard to spot because we have not seen it in our lifetime. We need to make sure that asset allocation numbers are appropriate for your level of risk and also appropriate to help us all "sleep at night."


** I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial **

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