The Trump rally continues and all indices are making new highs. The Dow is less than one hundred points from the fullsizerenderelusive 20,000 point author Harry Dent (an official Alphavest ‘NOISEmaker’) has prognosticated since 1998—Harry may just get it right this year. And that’s not often.

Most fear that Janet Yellen and the FOMC meeting today will endanger Dow 20,000 and further hurt investors bond holdings.  This will be only the 2nd rate hike in 10 years, according to CNBC this morning.

Bonds having now slid to the #4 postion on the asset scale, we, too have scaled back our allocation to bonds and are thankful for this shift with the expectation of a rate hike today.

On Friday, December 9, all three major U.S. stock indexes ended at record highs. For the first time in five years, they each posted gains every day of the trading week. The S&P 500 was up 3.08%, the Dow added 3.06%, and NASDAQ increased 3.59%. International stocks in the MSCI EAFE even gained 2.9%, despite potential risks from the Italian referendum and impending end of the European Central Bank’s quantitative easing.

From our vantage point, we see a rally that appears to be picking up steam. Looking at this impressive growth, however, it’s easy to wonder whether the markets are becoming overvalued and a correction is in order.

In keeping with this concern, last Monday, December 5, marked the 20th anniversary of Former Federal Reserve Chief Alan Greenspan’s famous warning about “irrational exuberance.” Back in 1996, Greenspan worried that overvalued stocks and extreme investor enthusiasm could drive stocks to reach unsustainable levels. His warning didn’t slow the markets’ growth at the time, and several more years passed before the eventual dot-com crash.

So, are we facing the same irrational exuberance as in 1996?

Hardly. We’d argue that rather than being overvalued, the markets have yet to reach their fair price. Domestic fundamentals continue to provide positive data on the economy. With a new presidential administration coming in 2017, we may see regulations lift and banks push more money into the economy, causing growth to accelerate.

The markets’ recent growth seems to be based on rational exuberance. Investors see opportunities on the horizon, and they’re ready to grab them.

What’s ahead in this exuberant moment?

We’re happy to see new potential for growth, but we will continue to make choices based on detailed analysis rather than emotional reactions. This week, we’ll be paying close attention to the Federal Reserve’s December meeting, where the markets currently give a 95% chance that interest rates will increase.

Remember that we are here to help you capture momentum that will support your long-term goals. We won’t take more risk than is appropriate for your needs and comfort. If you have questions about your priorities, portfolio, or plan, let’s talk.  On the heels of our annual Investment Summit, you will see much of our discussions on both strategic and tactical investment management take hold in your portfolios in the come\ing days and months ahead. We feel our clients are well positioned for continued upside in this year-end rally, but more importantly that we are poised for any “exhales” that occur thanks to our tactical strategies. Risk-reward is a large theme that we are continuing to honor. Thank you for keeping a long-term perspective on our strategy’s effectiveness.

Tuesday: FOMC Meeting Begins, Import and Export Prices
Wednesday: FOMC Meeting Announcement, Fed Chair Press Conference at 2:30 p.m., Retail Sales
Friday: Housing Starts