Blue Bell PWM

INSIGHT

Frothy? Bubbles?

Alex LaRosa

Investment Advisor Representative

September 18, 2020

Frothy? Bubbles?

No, we are not writing to you about cappuccinos, champagne, or bubble bath.

We’re talking stocks.

You may have noticed that the shortest bear market in history is over, and markets recently hit new record highs before pulling slightly back again.

Will stocks keep going higher? Will they stay volatile?

Is another bear market around the corner?

Maybe. Maybe not.

As is pretty common in these situations, market strategists are split.

Some see a new bull market that reflects a recovering economy.1

Others see troubling signs of a bubble that could burst.2

What could push stocks higher?

  • A market-ready COVID-19 vaccine or major treatment breakthrough that reignites optimism.
  • More government stimulus that supports consumers and businesses.
  • Good economic numbers that suggest we’re on the other side of the recession and the recovery continues.

What warning signs are flashing?

  • A rally mostly powered by tech mega stocks that isn’t reflected in the broader market.
  • Uncertainty around a November election that’s already contentious.
  • A possible “Minsky moment” market collapse fueled by the Fed’s easy money policy and unsustainable stock prices.3
  • Predictions of a second wave of infection that could provoke more shutdowns.

Bottom line, we can’t predict what comes next, and it’s too soon to claim victory for markets. Maybe we’re on a new bull market run. Maybe we’re facing a second correction.

Since we can’t predict the future, we’re focused on helping our clients cover their financial bases for the next year and take advantage of the opportunities volatile markets can offer. We continue to search for good value investments, provide some downside protection, and position your portfolio for the long-term. 

On the personal side, we hope those of you who have children see a safe return to the new school year whether it be online, in-person, or a combination of the two.

We are always available if you would like to review or tweak your investment plan. Just give us a call at 610-825-3540.

Get all your investment questions answered, Quickly

Frothy? Bubbles?

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