It's Been a Good Year...

Let’s put it this way. It’s been a good year.

Rex Johnson

It should come as no surprise that markets continue to be strong. It has been a good year for financial assets. For those who keep scratching their heads and wondering how, I suggest tone down your level of confidence and wear a hat. Favorable conditions to support gains in the financial markets remain intact. Low inflation, ample liquidity, high employment, technological advancement and globalization all contribute to asset prices continuing to move higher. And now tax reform and talk of infrastructure spending is acting like a shot of Red Bull to a sleepy teenager. Sure, valuations are above the mean but this is meaningless. Mean reversion does not occur automatically. Just because one data point conveys an overvalued/undervalued condition does not mean the next data point will revert. Remember, momentum and randomness are powerful components to the behavior of markets and are disconnected to reversion and fair value. Greed and fear of “missing out” are also present. But let’s not be naïve. The risk/reward tradeoff seems skewed and the low volatility we currently have indicates continued gains… but not forever.

Any change in the factors I’ve talked about could become sand in the gears. But not today. Investors have had a good year. Investment managers have had a good year. Enjoy it while it lasts.

SCI HIGHLIGHTS

Focus: Lognormal Distributions

Our rigorous investment analysis has some key features that make us unique. Today we focus on one element, Lognormal Distributions.

Advancements made notable by Aitchison and Brown in this area enhances the mean variance two parameter model by measuring the magnitude and frequency that a manager out/under-performs their benchmark to reduce as much uncertainty as possible in the portfolio. Their work allowed for the incorporation of negative returns in the lognormal distribution.

Weekly SCI Webinar

We host a weekly lunch and learn online webinar to answer questions about the Salt Creek platform and to provide training on the best practices for the services available on the advisor portal. Please join me for a laid back and open session on Salt Creek and the new services available.

Every Tuesday starting 10/3/2017 @ 12pm CDT

Join from PC, Mac, Linux, iOS or Android:

Click here for Conference Login

Meeting ID: 325 159 0655

Dial In Audio: 669-900-6833

LaSalle St. Investment Advisors, LLC
940 N. Industrial Dr.
Elmhurst, IL 60126