In a globally integrated economy, one would assume that happy times in one area that is not accompanied by something resembling happy times elsewhere signifies that something is seriously amiss.
Is this of concern to most market participants, specifically those that are US based? Apparently not, as higher highs and a gravitation toward normalcy in valuation models is well underway. And this drive to valuation normalcy is occurring despite the many unresolved and unknown outcomes inherent in these extraordinary times.
The prudent investor would argue that the extraordinary times we live in warrant a below average valuation level; that the uncertainty of extraordinary actions like QE to infinity should be questioned aggressively and not blindly accepted as being a sweet deal with no consequences.
Investment Strategy Implications
Does the fact that US marches to all-time highs on its own of some importance? Does it suggest that in a globalized economy and market where the interconnected nature of business and finance with the ability to transmit an occurrence at speeds greater than policy makers can react to create an environment where something, somewhere, somehow may manifest itself into something unforeseen faster than you can say high frequency trading? Does it suggest that something may be rotten in Denmark? One would think so.
Technical Tuesdays is a service of Blue Marble Research Advisory and illustrates selected elements of market intelligence analysis. Market intelligence analysis - along with fundamental and thematic analyses - form the three-legged stool of the analytical approach employed by Blue Marble Research Advisory.
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