Why a Sideways Market is Just Fine

Last year capital markets levitated almost three times as high as earnings growth. Loosely, earnings growth and capital market growth should approximate each other.

Sideways Is Our Friend

We are the first to say we always want to make money. Making money with good fundamentals is a much better long-term outcome than frothy exuberance.

Markets Are Manic

Remember capital markets are usually manic. Overshooting on the high side and then again to the low side. Assuming valuations are somewhere between 10-20% overvalued here in the US, sideways is our friend!

Grow Into Valuation

The longer markets churn sideways AND companies continue to make profits, which they are doing, the more fundamentally correctly valued we become.  Sideways it good from our perch as the alternative is ugly (down.)

Have a Great Day!

John A. Kvale CFA, CFP