Transcript:
Caroline Woods:
But for those investors looking to put some money to work—maybe they missed the initial huge run higher—would you say that opportunities like last Friday were a good buying opportunity, or will there be better? You can’t time the market, but would you be comfortable putting money to work right now, with stocks very close to record highs?
Kevin Mahn:
Yeah, I do believe we’re in a buy-the-dip type of phase once again right now. We’ve had 33 record closes thus far this year for the S&P 500—57 such record closes last year. We have the market trading at elevated valuations, so most would think, “How much higher could we go?” But we got a tailwind back in September, and that tailwind came from the Federal Reserve.
There was a stat put out by Goldman Sachs that looked at the last 40 years and found that the Federal Reserve cut interest rates eight times after pausing for six months or more, as they did in September. Now, in four of those times, Caroline, the economy moved into recession—that’s not our base case here. In the other four instances, however, when the economy continued to grow—even if at a slower pace—the market moved higher by an average of 8% over six months and 15% over the next 12 months. I think we’re leaning more toward that, but you’re going to have to be a lot more selective to find those growth opportunities this time around.
Caroline Woods:
15% from here?
Kevin Mahn:
From here, over the next 12 months.
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