February 8, 2016 was more important than November 8.

by Richard Bernstein

Questions whether the stock market could enter a correction or worse, because of Washington, DC’s policy failures sem to totally miss the point that fundamentals were improving long before the presidential election. Certainly, the market’s appreciation accelerated after the election, but few investors seem aware of the improvement in fundamentals and market rotation that occurred more than a year ago.

The important date in 2016 for investors was February 11, and not November 8. The stock market bottomed on February 11, and the sectors leading the stock market out of that trough were cyclical. Investment discussions focused solely on Washington, DC seem to ignore that important point.

Whether the market enters a correction based on Washington, DC’s failures seems a moot question because virtually no one can consistently time corrections. However, we think the probability of a much more serious bear market is very low regardless of Washington because the underlying US and global fundamentals remain healthy.

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