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Don't lose sight of the fundamentals

Politics, not economic fundamentals, have been driving equity markets over the last month. But with the US first quarter earnings season underway the fundamentals should come back into focus. US growth is solid and this economic momentum is supporting robust corporate earnings growth, which we expect to reach 20% in the first quarter. The trend in earnings has helped make US equities more attractively valued and we remain overweight global equities.

The Galton Board

Investors who kept calm, stayed invested, and rebalanced through the recent correction look set to be rewarded in a month that highlighted the difficulty, and potential costs, of trying to time the market. The worst week since 2016 was followed by the best week since 2015, and global equities are now just about 5% short of their all-time highs. Investors who sold out any more than three weeks too early and bought back any more than a week too late would still be worse off than a buy-and-hold investor.


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