Tomorrow the investment team at Pinnacle will gather for the week, and the job at hand is to get to the bottom of the all-important question right here of whether the current market selloff is still just a correction, or maybe something more. For months we’ve been giving the bull market trend the benefit of the doubt, even as some cracks in the story have started to surface. Recently the market seems to be succumbing to a variety of forces that are coming together at once. Poor economic data, continuing problems in the Eurozone, emerging market tightening, and a QE program that is ending this month are just a few of the primary drivers that have the markets shedding some of their prior exuberance.
As the recent correction has intensified, emotions are naturally getting high, and the headlines get more negative every day. Tomorrow our job will be to attempt to filter out the noise coming from CNBC, and simply dissect each part of our process to determine what the weight of the evidence is telling us about the state of the markets. If we determine the weight of the evidence has changed, it’s not too late to do some material shifting in portfolios to get more defensive. If it hasn’t, this may represent a great opportunity to position our portfolios more aggressively in an attempt to outperform as we come out of this corrective process.
The discussion should be lively and there will be many points and counterpoints to weigh in on. I’m not sure how it will turn out, but at the end of the meeting our goal is to determine if the market deserves the benefit of the doubt right here. Getting to the answer will be messy, and a tough slog. But it’s a necessary part of our process that will allow us to proceed with sound tactics in our portfolio construction.
