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12:00 TUESDAY – Stock Market Report #138 – 11/2/21

by Robert Holman | The Defensive Advisor |

MARKET RATING … Staying at 7 (where 0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish). Two weeks ago, I noted the rally phase entered on Wed 10/13, so now my risk concerns are abating and my optimism is rising.

THE FED … Expectations are the Federal Reserve will announce on Wednesday that they are beginning to taper their bond buying program. Assuming it’s a $15B per month reduction, then in 8 months the Fed will no longer be buying any bonds. Sometime after that, the Fed will probably raise interest rates twice, by 25bp each, or ¼ of 1% for each increase. So, interest rates will be ½ of 1% higher by the end of 2022.

The question is … how much of that is already in stock valuations. In other words, have analysts begun using these future estimates of interest rates in their current stock price calculations (discount models). If so, great. But if not, if they are waiting on the announcement before moving forward, then we could be headed to a downward market caused by higher future interest rate assumptions.

ECONOMY … THE FED NEEDS TO GET ON WITH IT. CONGRESS NEEDS TO GET ON WITH IT. Unexpected developments in either could derail the rally taking place, but absent that, it looks like clear sailing ahead.

EARNINGS … So far, 3rd Qtr. earnings, and/or forecasts for the 4th quarter, continue to be better than expected, so we will probably head up for a while. Consequently, I’m attempting to make new commitments with our available funds.

PORTFOLIO … Just click here, and I’ll be happy to send you a complimentary portfolio evaluation – explaining what’s good in your portfolio, how your portfolio is likely to perform in the upcoming economic environment, pointing out any flaws we find in your portfolio, and giving you our ideas for improvement – all at no cost to you.

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TO MY CLIENTS, THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018, up more than 94% in our moderate risk portfolios for the 39-month period ended September 2021, after all expenses are deducted.

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: OR

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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