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Markets (^GSPC, ^IXIC, ^DJI) opened higher on Monday despite lingering trade war concerns. However, Alex Morris, F/m Investments CEO and CIO, argues that this does not necessarily mean it's time for investors who jumped out to put everything back into the market.
Morris explains why investors should avoid chasing the rally and instead focus on disciplined rebalancing and opportunities in short-duration fixed income.
To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.
I don't know if you can call the action we're seeing this morning dip buying necessarily, but regardless you would say don't do that. Why?
Well, I think folks were shouldn't have jumped out of the market, right? If you did, you should just be easing back into it. This isn't necessarily the moment to put everything back in the market. And it's simply because what you're seeing now is some great optimism in the markets today, right? There's a lot of reasons to be pessimistic and yet, despite calling all of us cynics, here we are with a bunch of green across the boards. It's a little bit of greed. But realistically, I think if you jumped out, you're going to see more volatility and picking any point in time, just roll the dice and pick one. So, you might as well just stick to your asset allocation and rebalance slowly back to where you want to be because you're going to see a lot of things happen between now and the end of the session and now and the end of the week and the end of the month and they're all going to be quite different.
Somewhere around 80% of this market is trading below its 200 day moving average. Where are the opportunities that you can't avoid even knowing that pullback that's baked in right now?
So we still like being long the bonds and we like being long the short end of the yield curve. So something like T-bill, we like ultra short tip, something like R bill that's out there, which we launched recently to help folks really capture that inflation protection. Because if we take away the T word for a few seconds, forget the dog year that was last week. We still have a lot of other things in the market that we're still fighting. We still have unemployment numbers that are pretty strong. We have inflation that, although it missed by a little bit, fears are pretty high. We really need to stay focused on those primary factors. Tariffs as controlled by Donald Trump and the roll forward, roll back, roll around in the mud, whatever it may be, are all going to happen and we can't stop that. And you, and as we've seen the last week, if you're not with hovering with your finger over the mouse at that exact second, you can't check that opportunity. So probably better to just stick and what works. And right now, that's also fixed income.
