Opening Statement from the March 2016 Intelligent Investor

Opening Statement from the March 2016 Intelligent Investor

Originally published on March 4, 2016  

Note: An earlier edition of this report was accidentally released with the wrong date. We have since released the correct report from the March issue.

The February issue of this publication was released during a period of heightened pessimism. In the days prior to the release of the February issue, the selloff in oil once again extended into the equities markets. Although we expected the stock market to sell off, we believe much of the downside over that period was due to panic selling.

During high risk periods such as what we recently experienced, it is important to focus more on investor sentiment and downward momentum rather than valuation and reason. Accordingly, in the February issue we reminded readers to focus on risk. At the same time, we encouraged aggressive investors to look for position reentry once the market showed signs of a rally.

Within two days of the release of the February issue of this publication, the oil markets began to mount what would eventually result in a tremendous rally, which spilled over into the stock market. This is something we pointed to watch for. It is important to keep in mind that oil price momentum continues to drive stock market momentum. However, this relationship will not persist indefinitely.

Thus far, the Dow has rallied from an intraday low of 15,503 on February 11, to an intraday high of 17,130 as of March 10, 2016. Consistent with our February US market forecast, we believe the US stock market...