Even among the political tensions last week, all three major U.S. stock indices were up! In the past, we have said to follow the Fed and the economy, because political actions usually have short-term, knee jerk reactions on the markets. Considering all the news about Syria, and Trumps legal situation, the S&P rose 2%, the Dow rose 1.8% and the Nasdaq increased 2.8%.
With the market trading at just above the historical average of 15 times 2019 earnings, we still believe that the market can achieve mid-single digit returns for 2018 due to the fact that earnings are expected to rise 18% during the year. We also believe investors should diversify their equity holdings within specifics: emerging markets and international market sectors, as they are relatively cheaper on a P/E basis than their US constituents.
