(Full commentary courtesy of Myles Zyblock, Chief Investment Strategist, Dynamic Funds)
Market Update: Addressing the Volatility
This year’s leadership stocks having been aggressively sold over the past couple of days. Communications Services, Consumer Discretionary and, most notably, Technology have been leading the way down. The S&P 500 has been caught in this downdraft given that it has a near 30% weighting in Technology alone and a 50% weighting in the three prior leadership sectors.
Insights on Recent Market Events
Will this volatility continue? Perhaps. Or, it could vanish just as quickly as it began. That is the mystery of financial markets. Yet, it is hard to imagine the beginning of a lasting bear market given the macro backdrop. Fiscal and monetary policy setting are extremely supportive for the performance of riskier assets. And, most leading economic indicators are now in established uptrends which points to a much better corporate earnings trajectory on the road ahead. While pockets of froth are evident, we do not see the widespread greed that usually marks the ending stages of a bull market. As many learned through the February-March sell-off, sticking to a strategic investment plan is usually more rewarding than attempting to correctly time each and every bump in the market. As Mark Twain aptly noted, equity markets can be volatile at seemingly random points in time but, as history has shown, they have offered rewarding returns through time.
(End of Myles Zyblock commentary)
Sources: Dynamic Funds, Bloomberg