Value matters. It seems simple but the market is far from convinced of the concept right now. The market is enthralled by stocks that are beating estimates and has no patience for companies facing any type of turbulence. The market is being pushed, pulled, and generally bullied by the forces of fear, greed and liquidity.

The current combination of greed, fear and liquidity, however, has meant certain assets such as government bonds, high quality corporate bonds and “quality” stocks are hitting multi-year highs, while other assets are hitting multi-year lows. This bifurcation of asset values is evidenced by certain areas of the market defying gravity (Treasuries) and being priced for perfection (U.S. Mega Caps) whereas other market segments are declining precipitously (natural resource related companies) and are priced to never recover (U.S. coal companies). Market participants exacerbate this volatility by focusing on day-to-day news, such as macro headlines, political news and quarterly earnings announcements, rather than long- term fundamentals.

In these uncertain times Tradewinds knows the importance for investors to keep calm and carry on! Investors must remain objective, 1) recognize the massive amount of liquidity being pumped into the system, 2) avoid overvalued areas of the market where there is either an abundance of greed or a lack of fear and 3) take advantage of opportunities where others are fearful due to temporary challenges. These currently “unpopular” investments could protect wealth by providing exposure to scarce assets and sustainable franchises that will retain value.

LIQUIDITY 

…..read pages 2-7 HERE