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Inflation and its impact on interest rates continues to be the driving factor in financial markets and the overall economy. There are certainly signs of inflation slowing down in a practical sense, with what we are seeing in housing, as prices decline in many of the formerly hottest markets. That will take time to show...Read More
The Huge Cost of Trying to Time the Market and Favorable Election-Year DynamicsToday I saw an interesting statistic that I wanted to share with you. If you sold stocks at the bottom of each 10% selloff, and then bought back 10 days later, you’d miss out on over 2/3rds of the gains since 2002. This...Read More
The Wilshire 5000 index is down 26% YTD. Historically, since 1971, only one of 20 occurrences of drawdowns exceeding 20%, resulted in stocks being down just 1-year later, with the other 19 being positive. All of the occurrences saw the index higher 3, 5, and 10 years later, which is simply astounding. Please make sure...Read More
The S&P 500 is now down 25% YTD, which puts it in the top 10 worst selloffs historically. What is particularly unique about this bear market is that bonds have offered no help whatsoever, generating massive losses as well. Even conservative investment grade bonds are down by 22% YTD, when the previous biggest loss on...Read More
It’s been a bleak week and month frankly, with the S&P 500 down nearly 5% on the week as I write, and well over 11% on the month. Current market sentiment is as bad as it has been since the Financial Crisis, which is really saying something given there have been quite a few significantly...Read More
Today the Federal Reserve raised the Federal Funds rate by the expected 75 basis points. We haven’t seen rate hikes like this in several decades, so it continues to rattle both equity and fixed income markets. Major equity markets were down nearly 2% today, following several weeks of losses. The Fed is talking a tough...Read More
Today’s higher than expected August CPI report, rattled the market dramatically, causing the Nasdaq to drop by 5.2%, the S&P 500 by 4.3%, and the Dow to drop by 4%. This was the biggest down day since June of 2020 and the 8th daily decline of greater than 3% on the year. The recent decline...Read More
The stock market has reacted very negatively to Fed Chairman Jerome Powell’s hawkish interest rate outlook, with the S&P declining by roughly 6% over the last 4 days. Weaker economic data and declining commodity prices gave market participants hope that the Fed might pivot, pointing to less rate hikes, but Powell talked a tough game,...Read More
For those of you that have been reading this newsletter, you’ll know that we have been writing about why most bonds have made so little sense to invest in over the last few years, given the historically low yields and risks from higher rates and inflation, which has now come to fruition. The average bond...Read More
Markets have had a nice rally since the mid-June lows, as signs that inflation has peaked have investors a bit more optimistic that the Federal Reserve won’t have to raise rates as far. I’m definitely in the camp that the inflation growth rate has peaked and the signs of it are quite pervasive. With that...Read More
Today’s CPI report was very positive, coming in lower than expected. This is very good news, if this trend continues the Federal Reserve might slow down on its rate hikes. In addition, Friday’s July employment numbers were better than expected, although new unemployment claims are starting to rise, as companies are ramping up layoffs in...Read More
Last week we wrote to you about when to expect bear markets to end and we touched on the first day of big bank earnings. Well, since then we’ve gotten earnings reports from Citigroup, Bank of America, Wells Fargo, Morgan Stanley, Goldman Sachs, and Ally Financial. These companies have access to an enormous amount of...Read More
When you are in the midst of a bear market, all the news is bad. You are usually either in or about to be in a recession. Analysts that kept telling you to buy stocks at 50% higher prices, now tell you to sell the same stocks despite them being dramatically cheaper. Economic data gets...Read More
During bear markets, it is not uncommon for market participants to be focused on if there could be another 10-15% downside, regardless of the fact that the market is far cheaper than it has been in several years when they were willing to invest aggressively. Bear markets bring out the biggest pessimists, peddling the most...Read More
