I concluded last month’s Strategy Thoughts with, “There currently exists a lot of ‘hope’. Hope that central banks will continue to buy gold, hope that the Fed will pivot or pause, hope that authorities will contain the current banking crisis, and hope that all of this will continue to justify still very high valuations. None of this presents the kind of back drop typically seen at a long term bottom or buying opportunity”.
Perhaps the single most important question now is encapsulated in this month’s title, is hope still alive and well, and it seems it certainly is with markets having held up despite there being so much investors could choose to worry, or even panic, about. Adding to the list of ‘hopes’ covered last month is the ‘hope’ that the US will not default on its obligations and that the debt ceiling will once again be raised, as it always has in the past. This month’s edition will once again review the many signs of hope and also explore the very real danger of forecaster underestimation. But first it probably makes sense to quickly review the old adages of bull markets climbing a wall of worry and bear markets sliding down a slope of hope, from an expectational point of view.