With the recent Jackson Hole meeting and comments coupled with the latest GDP numbers and market moves, it certainly appears the Fed is poised to raise interest rates this month. It is my thought that market participants are now pricing in a rate hike with the recent round of selling. We saw the S&P break below 1,850 last week, and I wouldn't be shocked if we see that again. If we get more bad news out of China, we could see the market go lower than that.
However, most of the selling appears to be broad based selling that is akin to simply dumping stocks across the board. To me, this is not the way to reduce equity allocations...but with the abundance of Exchange Traded Fund exposure in the market, I guess that might be the only way to reduce that specific exposure. So while they are dumping those funds, I am going to be looking for the gems that are being thrown out with the market as a whole. You see, I do agree that investors should not be over-exposed to the market in general. But I do see lots of interesting investment opportunities with the changing landscape that is unfolding right before our eyes. I will seek to snap up some of those gems when the prices get to a level that I find attractive.
But, in the meantime, I do anticipate more market weakness as this rate hike is getting priced into the market.