By almost any tested valuation method the stock market’s current level seems rich.  We are, however, in a first of a kind central bank accommodation period, with zero interest rates and even negative interest rates prevailing in some countries. How does one derive a price earnings ratio from a zero, or even negative interest rate environment? How does one discount corporate cash flow in such an environment? Analytical yardsticks must be put aside because they don’t seem to be working in a normal fashion.

Instead one must focus on central bank monetary and currency policy in order to get the proper bearing. Almost without exception, central bankers around the world have taken to printing vast sums of money in an all out effort to fight deflation and economic collapse.

At home, our election will dictate future monetary, currency and tax policy. It is our belief that the election results will have a greater effect on markets than perhaps any election in history so it is imperative that investors keep an ample supply of cash at hand. It is equally important to be sure that all investments, be it stocks or bonds, are of the highest quality and liquidity. Until we know the election results, including the “down ballot ” results, it is impossible to analyze the market and project it’s direction before the election.