Outlook Unchanged, But It May Be Time to Invest More Internationally
Just as the 2nd Quarter came to a close and the outlook for stocks was on the rise (see the attached link to our July commentary below ), the trade war with China flared up again. This sent stocks spiraling downwards alongside renewed concerns about global economic growth and a potential recession.
Over the ensuing two months however, a partial trade agreement is assumed to be in the works, the Federal Reserve lowered short-term interest rates further, and indicators of a recession have subsided. The re-printing of our last commentary is intentional: to both reinforce our unchanged outlook for stocks and the economy, and to focus attention more on longer-term investing rather than headline-chasing shifts in portfolio allocations.
Though there are certainly always risks present in stock investing, our baseline scenario remains bullish for stocks:
Pressure is building in Europe for some form of fiscal stimulus, mostly on the part of Germany and the Netherlands. Consequently, European stocks (and international stocks overall) are beginning to outperform US stocks for the first time in a decade. We will be looking to increase exposure to international stocks in the coming months.
Nate Cultice, CFP, FSA
Castle Wealth Planning
Santa Barbara, CA