Strategy Report: Complacency Bordering on … Exuberance

Equity markets around the globe advanced into new high territory in October, with the S&P 500 posting a total return of 16.9% YTD. Global fundamentals remain supportive with many indicators signaling the potential for further gains. While volatility has been notably absent from markets this year, and as each dip seems to bring a fresh wave of buyers, in life it is never a good idea to be complacent. Extended periods of economic growth and rising markets can obscure underlying structural imbalances which often become strikingly obvious when a “relief valve” is triggered. Prudent investment management dictates a continual frank assessment of risk and potential return.