For investors growing skittish about the continuation of the bull market and global growth and investing opportunities, the top strategists at Charles Schwab have a message for you: "Let the good times roll."  Despite the political risks, frothy valuations and often unfounded comparisons to past market tops, Schwab sees several reasons to remain optimistic.  In fact, they see five reasons to be thankful as IMPACT 2017 kicks off in Chicago a little over a week before Thanksgiving. Jeffrey Kleintop, the Chief Global Investment Strategist for Schwab, outlined the five reasons in a recent market commentary.

The 5 Reasons to Be Thankful

  • Kleintop cites the fact that the global stock market has posted gains every month of 2017 so far. Citing the MSCI AC World Index, he notes that 2017 is the first year in its 30 year history that this streak has ever happened. As December is usually a positive month for stocks, the trend looks likely to continue.
  • Every major global economy is growing.  Kleintop notes that all 45 of the major economies tracked in the OECD (Organization for Economic Development and Cooperation) are posting gains. That hasn't happened in a decade. Kleintop pointed out in his keynote speech that investors around the world are asking him if these trends are too good to last. His answer is pretty clear: "I don't think its too good to last."
  • Corporate earnings are hitting all time highs. Average earnings for global companies are around $30 per share, levels they haven't hit in 10 years. Stock prices generally follow earnings, and this year has been no exception.
  • Stocks are less vulnerable to risks. Brexit, the U.S. election, tensions with North Korea, none of these major political events have managed to derail global markets, which have proven resistant to just about any bad news this year.
  • The global economy is likely to continue growing in 2018. Kleintop notes that reliable economic indicators including the yield curve are not pointing to signs of a slowdown. In fact, many economists have been raising GDP forecasts for major economies around the globe.

The lingering question: Is all this good news priced in to global markets?  Kleintop believes that markets, especially the U.S., Europe and Japan are fairly valued by historical standards. Given that the U.S. stock market is so heavily weighted in technology with outsized market caps of companies like Apple, Amazon and Google, its valuation remains fair with room to expand in 2018.

His recommendation: Investors should continue to look globally for opportunity, re-balance their portfolios, and prepare to give thanks again in 2018.

 

 

 

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