Investing With Clarity™ Blog

How can we still be so Bullish?

April 9, 2018 1:29:02 PM

One might call us Pollyannaish defined as; “When you put a positive spin on everything, even things that call for sadness or discouragement, you're being Pollyannaish”

However we would prefer the following:

One might call us Sanguine defined as; “Optimistic or positive, especially in an apparently bad or difficult situation.”

Why Sanguine vs. Pollyannaish?…

In light of the relentless volatility of the Equity Markets the last two weeks our “Bullishness” has been justifiably brought into question. We would simply respond that our opinion is not based on mere “hope” but the following:


When People are Fearful I Get Greedy

According to the Wall Street Journal article dated April 6, 2018 by Ria Gold and which can be read in its entirety here

  1. “Investors are at their most pessimistic in more than seven months, according to the American Association of Individual Investors’ most recent weekly sentiment survey, which measures participants’ outlook for the stock market over the next six months. In January, survey participants were at their most bullish since late 2010.”
  2. “Signals from options markets, equity flows and sentiment gauges are collectively the most downbeat he has seen since shortly before the U.S. presidential election in November 2016. U.S. retail investors appear to be the biggest sellers of stocks.”
  3. “Investors have redeemed a net $25 billion from the popular SPDR S&P 500 exchange-traded fund so far this year, according to FactSet. More broadly, U.S. equity funds overall haven’t had net retail inflows for any week since 2017, according to fund-tracker EPFR Global.”
  4. “Meanwhile, the National Association of Active Investment Managers Exposure Index, which tracks active money managers’ average exposure to U.S. equity markets, fell to 55.57 this past week, down from an average of 71 in the first quarter of the year and an average of roughly 63 since mid-2006.”


Tariff War is another Contrived Crisis

According to an article in the Business Times which can be read in its entirety here

  1. “A TRADE war between the US and China probably would take a bite out of the world's two largest economies but wouldn't do enough damage to pitch either into recession, provided it's contained.”
  2. "A trade war between the US and China does meaningful damage but doesn't trigger a recession in either country," said Mark Zandi, chief economist at Moody's Analytics Inc, in West Chester, Pennsylvania.”
  3. “The looming trade spat is taking place against the backdrop of an US$80 trillion global economy that is firing on all cylinders and is projected by the International Monetary Fund to expand at its fastest pace in seven years in 2018.”


The Fed is not being Aggressive

According to an article on CNBC and which can be read in its entirety here

  1. "It remains the case that raising rates too slowly would make it necessary for monetary policy to tighten abruptly down the road, which could jeopardize the economic expansion," he said. "But raising rates too quickly would increase the risk that inflation would remain persistently below our 2 percent objective. Our path of gradual rate increases is intended to balance these two risks."
  2. ”He expects inflation to continue to move towards the Fed's 2 percent goal, even with wage gains that remain contained. Unemployment likely will drop below 4 percent, and Powell figures that labor force participation could pick up with the right mix of policies.”
  3. "The labor market has been strong, and my colleagues and I on the Federal Open Market Committee expect it to remain strong."



  • EPS Growth likely to be 19% in 2018 and 12% in 2019
  • GDP Growth likely to be 2.5% over the next several quarters
  • Unemployment Rate near 4%
  • Interest Rates still very low and likely to stay low
  • Remember the conclusions of the last 4 Pullbacks and we see this as no different


Sanguine yes but Pollyannaish not…only time will tell but we still like this market and this economy

Chuck Etzweiler

Chuck Etzweiler

MBA, CIMA®, CFP®, CMT, Vice President of Research

With more than twenty-five years of investment industry experience, Chuck directs the on-going research efforts of the firm, much of which help both advisors and clients understand the philosophy and strategy of Nepsis, Inc. in a deeper manner. A high percentage of the focus of the research is centered around money manager pitfalls, investor short-comings and repetitive behavioral biases that detract clients from earning optimal returns.

Prior to joining Nepsis, Chuck worked as Chief Market Strategist for True North Global Research and as a Securities Analyst with both Wells Fargo and the Bank of Hawaii. Additionally, Chuck has earned the CFP designation and is a Chartered Market Technician. Chuck is a graduate of Syracuse University and also has earned his MBA in Finance.

Chuck is an active member of the CFA Society of Minnesota, the Market Technician’s Association and the Investment Management Consultants Association.

Chuck was raised in Allentown, PA and now lives in California with his wife and two sons.



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