Issue 1 – The 2018 Stock Market Outlook

We’ve entered the new year with near record peaks in all U.S. stock indices running circles around most money managers. The bull market is on track to mark its ninth birthday in March of 2018, even with the S&P 500 climbing 18% in 2017. In fact, market internals like breadth indicators show broad-based participation arguing against a major top. Since 1945, the average trailing 12-month P/E ratio has been 17.5. History shows that six of the last 15 bear markets came from below-average P/E ratios. There is no threshold level that, once breached, gives investors a clear signal to get out. Furthermore, the level of interest rates does not offer much help either. Accordingly, there is no specific relationships between bear markets and valuation.

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