A recent analysis by Goldman Sachs does a rather good job of summarizing the challenges of our current over-valued stock markets. Read it here.
Essentially, domestic stock markets are overvalued, but supported by very low interest rates and a perception that central banks will forever intervene in any downturn. International stock markets are less expensive but subject to some unusual geopolitical risk.
Watching the recent news with President Trump’s new unnecessary squabble and insult-trading with Morning Joe talk show hosts reminds me that U.S. political risk remains large. I’ve never seen a presidency as vulgar, scattered, and puzzling as this, and I doubt you have either. So our executive branch may self-immolate at any time. Or not. We honestly don’t know. It’s also worth reflecting that the recent trend to off-the-charts anger and crudeness in public discourse probably reflects our society’s inner turbulent personality in some way. What does that imply?
It’s entirely possible that overvalued conditions in our stock markets could go on for years, and still possible that the Trump Presidency could get its act together. For us, the bottom line is that stock markets may continue to rise for years, until something external derails upward momentum. For that reason, attempting to dodge out of the way, beyond our current level of diversification, doesn’t seem to add value.
Happy 4th of July! It’s a great time to reflect on why we are all here, and what we want to accomplish.