The stock market has remained in a narrow trading range and gone nowhere in the past year and a half. When a one off incident occurs, whether it is a terrible terrorist assault on the helpless or a financial event, the market corrects and then returns back to this range. During these periods, I look for under-valued funds or stocks and add to portfolios.

As the US market has struggled for the past 18 months to remain flat to down a few percent; markets in other parts of the world are down well into the double digits. With the United Kingdom exiting the European Union, growth will certainly slow overseas. However with low interest rates acting as a put, hedge, or downside protection in the US stock market, I do not expect a sustained move in any direction until corporate earnings stop slowing or decelerating. My father, who was a governmental economist, always said in the long term only two factors matter in the stock market: earnings and interest rates. At the moment, we only have one of the two low rates, as earnings have been terrible.

The period of corporate reconciliation is here as stock prices can no longer stay up on buy backs, layoffs, and increased dividends without companies actually improving revenues. In addition to the earnings issue, we are right in the middle of the bad season in the market – May to October.

Lastly, with low interest rates and other world markets performing poorly, the US market remains the only viable place to invest. Thus, as the tug of war between low rates and poor corporate earnings continue, as I mentioned last quarter, I remain neutral on the stock market.