The U.S.-China trade war, slowing global growth and inverted yield curves are just a few reasons that are getting investors down, but Capital Wealth’s market strategist Jeffrey Saut said the bull market is still alive and well.
“The point is, a secular bull markets last 15-plus years. You can run how long this thing should last, either from October of 2008 or March of 2009 or April of 2013. The point is there ought to be years left in this thing and no one believes it,” said Saut, who has 50 years of market experience in tow.
“If we’re going into a recession, why are the most economically sensitive stocks, mainly the semiconductor equipment stocks, holding up so much better than the S&P 500?” Saut asked.
Saut’s comments come as Duke University professor Campbell Harvey, who pioneered the inverted yield curve, is advising investors to take preventative action now rather than wait for a recession to be in full swing.
“This is the time where you need to reflect upon your strategy. It’s actually easy to manage assets when the economy is booming. It’s much more difficult to manage into a turning point,” said Harvey. “It’s way better to have a plan to go by than to find yourself in a situation where the recession hits and you have to improvise.”
Harvey’s research found that since 1950, an inverted yield curve between the 3- and 10-month curves have reliably forecasted a recession on seven different occasions. Based on Harvey’s research, the yield curve must be in inversion mode for at least three months before sounding the alarm on a recession.
However, that time is now to sound the alarm.
“It’s not normal. It’s something that foreshadows bad times,” said Harvey.
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Key features of the fund:
- The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index (the “Index”)
- The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors
- Launched in January 1993, SPY was the very first exchange traded fund listed in the United States
Investors who stuck with SPY despite the market volatility the past few months have been rewarded with an 18.92% year-to-date performance, according to Yahoo Finance numbers.
For more market trends, visit ETF Trends.