Latest from the Quantamize Blog

Fundamentals for Stocks Remain Intact

Feb 09, 2018

Fundamentals Remain Intact

The adage “stick to what you know” may never be more relevant than in today’s turbulent markets. This is the concept put forth in a recent Barron’s article authored by John Kimelman and titled “JP Morgan’s David Kelly: “Nothing Has Changed Fundamentally”. Heightened volatility has increased concern amongst investors regarding the health of the equity market. While stock prices have fluctuated significantly over the course of the past week, an aspect that hasn’t changed is the fundamentals backing them.

There are numerous factors that can contribute towards pushing markets downward, with rising interest rates being one of more cited drivers currently. In this case, however, a weakening of the underlying fundamentals supporting multiple lagging equities does not appear to be one. Stocks that were financially sound before the recent downturn are likely to have maintained their allure amongst fundamentally inclined investors. Perhaps it has even further increased their attraction, as many quality equities have moved off their recent highs. In fact, as a recently published Wall Street Journal article titled “The Daily Shot: Stocks Haven’t Been This Cheap in Two Years” posits, this may be one of the better entry point opportunities for investors. The S&P 500, for instance, is down nearly 10% from its yearly high. Is there potential here to “buy the dip”?

For the Wall Street Journal article, click here

For the Barron's article, click here