Market Commentary

At this time (early -2025) the stock market seems to be overpriced. That is, PE levels are at the high end of their historic range. This is probably due to excessive liquidity injected into the economic system from  efforts by Congress and the Federal Reserve to save the economy from the previous economic slowdown. The cash has to be invested somewhere and the best investment in the past year was in the stock market. However, inflation after a short term rise, is now refusing to go back to the Fed’s goal. As economic activity remains solid, Trump’s tariffs loom. When this has occurred in the past the stock market has been vulnerable to a correction. Most economists are predicting a growing economy in the next year, with unemployment remaining low and production improving, in spite of this a correction is very feasible, due to Trump’s erratic behavior (tariffs, handling of Gaza, efforts to end the War in the Ukraine, without Ukraine, Panama Canal, Greenland, dismantling of government without legal authority, etc).