Faced with a binary event, either a partial trade agreement or not, investors are cautiously waiting. Money flows into stocks are still positive, but just. Sector leadership waffles between business cycle leveraged stocks and ones considered less sensitive. This sector rotation is happening with increasing frequency as investors have little confidence in either outlook.

However, within sectors there are clear winners and losers. In short, the strong are getting stronger and the weak, weaker. Sector performance, therefore, is not totally determining portfolio performance; it’s still a market of stocks rather than a monolithic stock market.

Uncertainty surrounding the trade war, throw in the impeachment hearings, an impending presidential election, and a myriad of other concerns, it is remarkable that the stock indices are still near recent records. But now, investors are on hold. We have no greater insight into the outcome of the trade negotiations than others. We are, however, carefully reviewing portfolio holdings to assess their potential under either scenario. Our focus is on not just the near-term, but on the next several years.

Stay steady, my friends.

The Lonely Bull