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12:00 TUESDAY – Stock Market Report #134 – 10/5/21

by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com


INSIDE: Current market rating, the economy, and a free offer.


TO MY EXISTING CLIENTS, THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018, up more than 80% in our moderate risk portfolios for the 3-year period ended mid-2021, after all expenses are deducted.


MARKET RATING A slight adjustment to 7 (where 0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish) – I’m much more cautious about the near-term because risks are increasing, while remaining optimistic longer-term.


Mr. Market remains skittish and fickle – seems like either Monday or Tuesday of each new week brings a significant down day. Then we see a recovery, but in this process we are seeing lower highs and lower lows. No big deal, just volatility? Or, the start of a gentle rolling over? Could be Sector rotation? Maybe Style rotation? Bull-bear tug of war? Or, a typical pull back? Questions, questions, …


I’m hearing more talk of this being a normal or typical pull-back, because nothing has really changed and I’m wondering – is that right? Albeit expected, isn’t higher inflation, tapering and increasing interest rates a change?


What’s currently happening? Only a few Sectors seem to be performing well – energy and financials, mainly energy since the 20th. Growth outperforms when the market advances and Value outperforms when the market retreats. Relative Strength in Styles is coming from sideways moves – no Styles are really advancing.


ECONOMY … continues to be a mixed picture in my view.

Let’s focus in on interest rates and inflation – interest rates are rising (the Fed says it has the votes to begin tapering) and CPI inflation is coming down but remains above 4%. Increasing rates and persistent inflation can significantly impact equity prices, at least at times.


Why does it seem like MY INFLATION RATE is more than 10%? It seems like the prices of goods I’m buying are quite a bit higher (maybe to compensate for Covid-related real volume decreases?)


This coming Friday is the jobs report and maybe that will tell us a lot. In the meantime, I’m responding to increased risks by being conservative, watching and waiting for further clarification.


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Published every Tuesday at 12:00 noon. For more information on my investment and planning services, or to sign-up for this weekly e-Newsletters, visit my website: http://www.defensiveadvisor.com/services OR http://www.defensiveadvisor.com/contact


Opinions voiced in this post are for general information only and are not intended to provide specific advice to or recommendations for any individual, without complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.


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