The broadening of stock market leadership, which we described in our last letter, was interrupted in September by higher oil prices and rising interest rates. Typically, September is a volatile month, and the final quarter of the year is favorable for stocks. This year, we have a highly contested midterm election coupled with depressing negative campaign ads in the media. Notwithstanding these negative circumstances, we anticipate that the earnings season, which has just begun, will underscore very favorable growth and reassure investors.
The most negative stock market reaction of late has been toward technology stocks after their substantial advance; and renewed investment has moved into the healthcare sector. These developments benefit our client portfolios which are underweighted in tech and overweighted in healthcare.
