Short Take: What Goes Around, Comes Around

While short-term trends in the financial markets, by themselves, don’t provide a clear view of what’s coming, they can be a reminder of the virtues of broad diversification. As you can see from the chart below, small company, value, and international stock categories have mostly dominated the US Blue Chips, as represented by the S&P 500, over the past two months. And these small, value, and international categories continue to represent the most attractive valuations in the marketplace. As Benjamin Graham once famously suggested, in the short-run, the market is a voting machine but in the long-run it’s more like a weighing machine, where fundamental value is realized.