As humans, we yearn for simple narratives - cause and effect.; good or bad; bullish or bearish. However, reality rarely cooperates. Deep down, we know this to be true. We live in a dynamic world with infinite variables that can never be totally understood. From a market (SPY) perspective, think of all the widely accepted "truths" that have proven to be false over the last decade - the law of large numbers that says that corporations become inefficient and poor investments past a certain size, the connection between interest rates, inflation, and economic growth, or the impact of deficits and loose monetary policy on the economy. I believe that to succeed in life and markets, we need to cultivate flexible thinking and "loosely held convictions". In this week's commentary, I want to apply these principles to the current market environment and discuss why it's particularly germane. Read on below to find out more….(Please enjoy this updated version of my weekly commentary published September 01, 2021 from the POWR Growth newsletter).
First, let’s do a quick review of the overall market and what’s happened in the last week.
Basically, there was some nice follow-through to the market’s breakout from last week. While this is encouraging, what’s even more encouraging is that the Russell 2000 is leading the charge:
