Servignat Says: Do Not Fight the Trend

Servignat Says: Do Not Fight the Trend

I went to Disneyland over the holidays, and, despite the loss of power one day, my family and I enjoyed all the theme parks and crowds and overpriced milkshakes.  

Even though I was on vacation, I was reminded of the investment market while riding the Splash Mountain roller coaster in Frontierland. After winding through the ride, our log flume climbed the track in the dark, section by section, tick by tick.  You could feel everyone’s tension level slowly increase, our grips tightening on the bar in front of our seat, our breathing constricted as we anticipated the unknown moment when we would go over the top of the waterfall and ride through the big splash to the bottom.

Many of us feel as though we are taking a similar ride in the marketplace these days. Continuing into 2018, the market has climbed, tick by tick, dollar by dollar, to new highs never seen before.

Many of us feel as though we are taking a similar ride in the marketplace these days.  Continuing into 2018, the market has climbed, tick by tick, dollar by dollar, to new highs never seen before. At the time I am writing these lines the S&P 500 has had 12 record closes since the beginning of the year. Every time we think it can’t go any higher, it does, and we are all in the dark as to how long the rise will last.   Some economists have said the fiscal stimulus engineered by the Trump administration will likely see a downturn or correction after two more years of growth, but everyone is quick to disclose that no one knows for sure.

I defer to the saying “Do not fight the trend.” I think certain markets, especially in the U.S., are over-bought and it is a delicate time to buy stocks because they are so expensive.  But the momentum strategy I employ indicates, at least for now, that the positive trends we’re seeing won’t stop (or even slow down) anytime soon.  Naturally, mine is a reactive strategy, but one which I monitor throughout the day, every day, even while I’m on vacation in Disneyland.   If the markets begin to slow down and momentum shifts from positive to negative, I will employ that same strategy to guide my decisions about your portfolio positions, working to lower any inherent risk to protect the accumulations we’ve gained during this growth period. 

Walt Disney himself is quoted as saying “Whatever you do, do it well.”  That is always my goal, so when the time comes to go “over the waterfall,” we may both have the urge to scream, but I’ll be there to do what you’ve hired me to do – operate in your best interest, making calculated decisions on behalf of your investments, in a timely manner. 

-Jocelyn