One of the things I’ve learned in the investment business is it’s never a good idea to trust someone who is 100% certain about any outcome in the markets.
I’ve seen enough best ideas portfolios over the years to know most portfolio managers have no clue what their best ideas truly are until after the fact. There are simply too many unknowns and outside factors that can impact the economy, markets, sectors, and companies to ever give yourself permission to have complete certainty about the future.
Sure strong opinions are fine but they better be weakly held because the markets are a humbling place if you’re not willing to look at both sides of an argument.
The most certain investors are often those who get trapped in the recency bias and assume what has worked will continue to do so forever or the contrarians who assume only that which has performed poorly is worth owning.
Both of these camps can be right depending on their time horizon and market environment but always thinking in either a momentum or value framework is a sure way to be disappointed eventually.
You could make a compelling bull and bear care for every asset class or market right now. What you believe about these cases depends on how you’re positioned or what you believe about investing.
I don’t know what the future will hold so here are the bull and bear cases right now:
Bull Case. The United States has been the cleanest dirty shirt in the global laundry hamper for years and the S&P 500 has been a huge beneficiary of this.
The S&P is dominated by some of the best and brightest companies in the world which now includes nearly a one-quarter weighting in the 5 biggest technology companies which seem to be taking over the world.
Growth stocks also benefit from lower interest rates and it sounds like the Fed is going to keep rates low for a long time.