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AAM Viewpoints - It’s a “Charlie Brown” Market


“I think I’m afraid to be happy because whenever I get too happy, something bad always happens.”
 - Charlie Brown

Summary: The capital market saga in 2016 has transpired like a strip from the childhood cartoon Peanuts, by Charles M. Schultz. In nearly all of the Peanuts cartoons, our protagonist Charlie Brown nervously frets, ponders and debates the potential outcomes of the situation in front of him. After six short (or long) months, our “Charlie Brown market” has been fretting over the following major market themes:

  1. A tug-of-war between deflationary and inflationary forces.
  2. The persistent opaqueness of domestic and global central bank policy.

If that was not a strong enough cocktail, the garnish came in the form of Brexit just before the end of the quarter.

We highlight the classic image of Lucy holding the football for Charlie Brown. Time and time again, Lucy temptingly sets the ball to be kicked by Charlie Brown. However, as Charlie Brown rears back for his big kick, the ball is suddenly pulled away and he lands with a thud on his back. Well, the ball has been pulled away from the market a few times in 2016. For each one of these aforementioned themes, when it appears the market is nearing a firm conclusion, new facts or exogenous events throw said conclusion out the window…and the market lands flat on its back.

Despite all of these calamities, the market is behaving like Charlie Brown, rising out of every downfall with everlasting hope and determination that the outcome of the next “kick” will be more favorable. As opposed to “hoping” the ball will be there for us to kick, Bahl & Gaynor remains focused on the same principles to guide our decision making.

Our investment thesis remains that at the core of any investment portfolio well-capitalized companies with established competitive moats and proven access to capital should be considered (a.k.a. “quality”). These companies have the ability to pay, and more importantly, grow their dividends at a rate faster than the market through an economic cycle.

 

CRN: 2016-0705-5448 R

Opinions in this piece are those of Bahl & Gaynor and are not necessarily that of AAM.

This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the Disclosures webpage for additional risk information. For additional commentary or financial resources, please visit www.aamlive.com.

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Effective, June 10, 2016, please note that Gene Peroni left Advisors Asset Management (AAM) to become President of Peroni Portfolio Advisors, Inc. Peroni Portfolio Advisors, Inc. ("PPA") is an investment advisor independent of AAM.

 

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