A common theme in most of last year’s missives was the extreme level of complacency in the markets due to extremely low volatility. That has now changed as over the last couple of months market movements have expanded rather dramatically. The previous complacency that markets will only go up is now being questioned and the very issues that I repeatedly warned about last year, are now coming home to roost.
Over the last several weeks I have been discussing the need to increase equity allocations in the portfolio model as we enter into the seasonally strong period of the year. However, I very specifically qualified that statement by stating:
“As I have repeated many times over the last couple of weeks, I am not highly convinced of the markets at the current time. Therefore, if you choose to wait for a stronger confirmation before increasing exposure that is completely acceptable.”
