The Big Story: The Run of the Bulls

Mark Ritchie II

Having the recent privilege of being featured on a segment for Real Vision Television, I had the opportunity to unveil RTM Capital Advisors’ bullish thesis.  For those unable to view the video, here is the summary.

In our view, the foundational pillar is that we had a bear market in 2015-2016 that almost no one in the financial world media acknowledged. This bear market came to an end in mid-2016 when the markets broke out to new all-time highs after the Brexit event. That breakout was then confirmed with the strong rally after the 2016 US election. For the record this is not a political endorsement, but there was a formidable wall of worry in place after the Trump election and the market climbed with ease throughout all of 2017. It is our view that what took place was the beginning of a larger move that many have talked down and missed out on altogether.  Furthermore, this was a view espoused by almost no one, and certainly contrarian when we first expressed it in late 2016. Even now it is still ignored.

The bear argument has been a very simple over the last several years regarding valuation, valuation, valuation…the market is too pricey. As tactical managers, we consistently look at the indicators we believe are best at assessing market risk. The problem with using value metrics such as PE or CAPE is that they have a terrible historical timing record (under low & high valuations). It is our view that these indicators are a mirage when it comes to producing superior risk adjusted performance. You are far better off watching the way individual stocks trade, as well as other indicators such as breadth in the market and new highs and lows.

Also important to point out, is that the US is not the only well performing market. This market condition is a global phenomenon where the US was not even among the top global stock market performers! We are certainly not “perma” bulls, we were very cautious through most of 2015 and 2016, however we try and bend with the market and still currently believe the wind is firmly at our back. This does not mean there will not be corrections or strong contra moves. Stay tuned, RTM Capital Advisors we will reveal its expectations for 2018 soon…