The Easy Money Has Been Made

The last two weeks have been spectacular - especially for smaller companies like the ones I tend to own.  However, all good things must come to an end and I think we are near that point.  Because of this advance, my valuation indicator has declined to a negative level again.  The indicator is tied to expected inflation and that data point has increased, even before the election.  Combined with a sharply higher bond yield, the outlook has deteriorated enough for me to go back to a fully hedged position.  Earnings are still OK and unemployment is stable but sentiment factors have also become much more problematic.  Everyone seems very optimistic about Trump's economic agenda but there is a lot of work to be done and much opposition that will have to be overcome.