There are plenty of reasons to dump stocks this summer, but here's why you shouldn't
Published: July 10, 2017 3:34 p.m. ET
Now is not the time, historically, to get excited about stocks.
The July to October span has proven to be a loser, on average, over the past 30 years, and the current rally is feeling stretched. Then there's the geopolitical circus. Nobody would blame you for shutting down your trading screens, ordering a fizzy drink and planting yourself unapologetically in the nearest hammock.
Some long time market observers are even asking whether we've reached "the point of maximum financial risk," as this chart suggests:
But Liz Ann Sonders, chief strategist at Charles Schwab, says you might miss out on a trend-bucking advance if you take your chips off the table.
"Conditions for stocks appear to be relatively smooth, illustrated by still-low volatility and major indexes near record highs," Sonders wrote in our call of the day. "We believe stocks will move generally higher, supported by solid earnings, low inflation, and a modestly growing U.S. economy."
Sonders, despite her bullish outlook on the market, says "we certainly don't begrudge investors taking a little rest and relaxation."
Regardless, she noted tech and energy stocks have slipped lately, while financials and health care have rallied. This rotation helps keep investors from getting overly optimistic, which can lead to the dangerous "euphoria" level above.
"This two-steps-forward-one-step-back movement is what we believe will help to extend the long-running bull market and, for now, help prevent a 'melt-up' scenario," she said. "As good as they feel while they're in motion, they don't tend to end well."
Posted by: sarah_oz@yahoo.com
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