by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
EQUITY MARKET RATING … 5.0 (0-4 bearish, 5 neutral, 6-10 bullish) … It’s worth repeating. The market is rallying, but it may be short lived. Why? Severe risks. War, additional boycotts of Russian oil, a likely 50 bp increase in the Fed’s key lending rate, short-term rates possibly exceeding long-term rates, all resulting either in slower growth this fall or a recession in a year. The market could increase while these issues get resolved. Getting in and out in such a hurry is tricky and challenging; a miss can be very costly.
Economic data has been good this week. Prices of tech stocks are increasing. Financials and oils are slipping.
Peace talks are probably meaningless to Putin; his agenda isn't likely to be stopped without extreme pressure. I expect optimism about peace talks to be shattered by the reality of Putin’s desire for conquest. We raised our rating to 5, but remain cautious, as the market may continue to rally, taking a breather from all the negative news.
But, these trends suggest a coming slow-down in economic growth. Market history shows that the third year of a bull market produces on average a 5% return (credit: Josh Brown). The market rallies when those pressures slip from focus, sells off when they come back in focus, resulting in dramatic price swings in both directions.
EQUITY MARKETS and the ECONOMY … Inflation may start to look like it’s slowing - as future months are compared to past months (with those prior months containing price increases). But, we think the rate of increase will still be painful. Also, port crowding continues to diminish. But the upward trend in prices will continue even if the percentages are a bit smaller. Consumers will feel an increasing impact of higher prices.
PORTFOLIOS … After reading this material, if you are unsure what to do with your portfolio, call me to discuss your circumstances and I’ll explain what ought to be done to help your situation. Just click here, and I’ll be happy to give you a complimentary portfolio evaluation along with a recommendation for two stocks to put into your portfolio.
I’ll also explain what’s good about your portfolio, how it’s likely to perform in upcoming months, and giving you a couple of ideas for improvement, all at no cost to you.
Alternatively, you may contact me by calling 972-702-6032, and I’ll give you a way to securely email your portfolio holdings to me and I will input the data for the evaluation.
TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018, for are doing better than the market return over the same time.
Excelsior Divitiae. Proverbs 21:5, 22:3, 27:12 and 3:56, Joshua 1:9, Ecclesiastes 8:7, 1Chronicles 12:32 and 29:11-13, and James 4:13-16.
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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.