LIVE MARKETS-Amid uncertainty, batten down the hatches, but stay the long-term course

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AMID UNCERTAINTY, BATTEN DOWN THE HATCHES, BUT STAY THE LONG-TERM COURSE

The uncertainty principle, also known as Heisenberg's indeterminacy principle, is a fundamental concept in quantum mechanics. It states that there is a limit to the precision with which certain pairs of properties can be simultaneously known.

"That seems to be a very descriptive summary of Trump’s first month in office," writes Philip Palumbo, founder, CEO, and chief investment officer of Palumbo Wealth Management, in a note.

As Palumbo sees it, the level and breadth of uncertainty is quickly swelling, and there appears to be very few places for investors to hide. This in turn, is beginning to make markets difficult to navigate.

According to Palumbo, after several years of earnings beats and rising earnings expectations, investors are viewing earnings with a much more critical eye. That is, they have been generally unimpressed by strong results, and unforgiving of even small earnings misses.

Despite recent market weakness, he notes that the S&P 500 .SPX and Nasdaq .IXIC are not that far off their highs, yet he says "it sure doesn’t feel that way." This, as the leaders of the last two years, the mega-cap tech companies, have started to flounder.

Therefore, the question appears to be where the leadership is going to come from as Trump "continues his crusade."

Since Palumbo believes it's safe to assume mistakes will be made, and no one knows precisely where, he is looking for the stock market to remain choppy.

He adds that although markets attempt to be anticipatory, at this point, the "current math is VERY complex. Things are changing fast. The uncertainty isn’t isolated, it is endemic."

Therefore, Palumbo says brace for quick and sharp market swings. "The important point for investors is not to be overly reactive to these swings. That can easily lead to mistakes. The best advice is to stick to the investment plan designed to achieve your long-term objective."

(Terence Gabriel)

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