What may be ahead for equities?

An aging profit cycle and higher valuations suggest now may be a good time to prepare for downside risk

Time to read: 3 min

The ninth anniversary of the current bull market recently occurred in March — which is the second-longest period without a 20% drop in the closing price of the S&P 500 Index.1 While some market-watchers debate exactly how to measure the beginning and end of a bull market, the Invesco Diversified Dividend Fund team is focused on the profit cycle and valuation.  We believe the profit cycle has moved into its latter stage and that valuations are currently extended. With this in mind, we remain focused on our fundamentally driven, bottom-up process.

Where markets are today

No one knows exactly when today’s bull market will end or when the appetite for growth and momentum stocks will abate. But we may see some key indicators that suggest growth opportunities may be

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Finding dividend opportunities as the profit cycle ages

A high-conviction, bottom-up approach to finding sustainable profit margins

Walsh_Meggan_sm_150dpi_RGB 0814As dividend value investors, my team is focused on sustainability of profit margins over a full profit cycle. I believe that we are in the later stages of the profit cycle, with corporate profit margins at about 1%1 below their peak levels in late 2014. What does that mean for us as high-conviction, bottom-up investors?

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