Everyone is probably familiar with the motivational efforts of sports teams’ managers and coaches and legendary half time speeches. Experience suggests that a team that expects to win, is more likely to be successful, and a team that expects to lose, probably will.
Investors might want to consider if the same may apply to business, and therefore, markets.
There has been much speculation as to why the stock markets have done so well since the November 2016 election and the drivers behind, what appears to be a worldwide improvement in business activity. Perhaps, the changes in political direction following the election, including the expectation that business taxes may be reduced and the potential benefits from a reduction in regulation, have made corporate decision makers more positive.
It should be obvious that, if corporate decision makers expect business to improve, and act accordingly, business investment is likely to increase, with a corresponding improvement in business activity and markets.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®