Mackenzie Minute: October 13, 2017
Alain Bergeron, Head of the Mackenzie Asset Allocation Team, says there are two factors to watch as equity markets reach new highs.
ALAIN BERGERON: Many stock market indices have reached new highs in the last couple of weeks and that’s interesting because at the same time many investors have been bearish for the last 12 to 18 months. And that’s driven by many factors, including the Trump tax plan that is back on the agenda, but really an important driver has really been the health of the global economy as well as the momentum that is accelerating. One simple indicator of the health of the global economy is the ISM Manufacturing Survey and it recently came out at 60.8. The last time it was that high was in 2004.
I believe it’s important to watch for two factors. Number one is: Is the global economy staying in its sweet spot, i.e. good growth and a bit of inflation but not too much. If these current conditions prevail, risky assets will continue to have a good run. Second thing to watch for is investor sentiment and market behavior. We haven’t had a correction for a long time so if these conditions were to change, that would change the outlook and the behavior and return of stocks.
For the Symmetry Portfolios and the Balanced Funds that my team is managing, we have been overweight stocks since the summer of 2016. So as market indices have reached new highs, that, of course, has a positive impact to our portfolios and, of course, benefitted well our investors.