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12:00 TUESDAY – Stock Market Report #170 – 6/14/22

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


EQUITY MARKET RATING…2.0 (0-4 bearish, 5 neutral, 6-10 bullish). The DJIA was down 10 of the last 11 weeks (including 8 weeks in a row) and was down for 18 of 23 weeks this year. Whew! Yet, 49 of 106 days have been up days (almost half) illustrating the bull/bear war that’s been taking place.


TODAY’s TOPIC (a continuing series) … What other important financial numbers do you need to know? We have already discussed free cash flow.


YOUR EXPECTED DEBT PAYOFF DATES – for both your CREDIT CARDS and your OTHER DEBTS. Any good financial planner can figure these for you – in Excel, for one credit card, use the NPER function, then go the extra step to figure the date. For multiple credit cards, go to https://www.calculator.net/credit-card-payoff-calculator.html – assumes you pay off the highest interest rate card first. Your planner should have even more sophisticated models. Of course, these calculations assume you do not add any new debt to those credit cards – for that you may need an accountability partner. And, when you are not adding new debt, you can call and request your credit card company lower your interest rate.


It may be helpful to know what happens to those payoff dates if you increase your monthly payoff amounts by, for example, $100. With the markets heading south right now, one of the best investments anyone can make is to pay down debt with an interest rate of 10% or more – that way you are earning a 10% or greater return!


In the example shown at the website above, it takes 51 months to pay off the debt. By adding another $50 to the monthly payment, it takes 37 months. What a difference! Converting to a date, which would be July 2025 versus October 2026. There is an old saying that you may want to remember – “If you can’t afford to pay cash for something, what makes you think you can afford to pay cash plus years of interest for it?” Call it by its real name – it’s a DEBT CARD, not a CREDIT CARD.


You can never be wealthy until you are free of debts. I’ve known plenty of rich people (note: I did not say wealthy people) who experienced significant income declines in economic downturns, were unable to pay off their debts, and went broke. Why? Too much debt. This type of rich is at best a temporary condition; it’s often undone by the business cycle. The WEALTHY typically have no debt, apart from a homestead mortgage or a business startup loan. The business cycle gives THEM an opportunity to buy assets others are selling on the cheap.


EQUITY MARKETS and the ECONOMY … The market does not seem to care about analytical or fundamental factors. So, risk exposure is currently more important than fundamentals – fears dominating fundamentals. It is all about oil, interest rates, inflation and the impact on consumer spending. It is unprecedented that consumer confidence is this low when employment is this high. Never happened before!


Inflation is stressing out everybody – here’s a key statistic for that - consumer sentiment, released on Friday, came in at an all-time low. Also on Friday, on a year-over-year basis, CPI headline inflation came in at 8.6% versus 8.3% in April. But the analytical number (year-over-year CPI core inflation), was down for the second month in a row, coming in at 6.0% versus 6.2% in April. I think Wall Street ignored the analytical core number and focused on the headline rate, for fear of how the consumer responds to continuing increases in gasoline and food.


The Fed looks at “PCE core inflation” and the pace of job creation (which in May showed significant employment growth and at that time suggested another 50bp increase) but many investors now want the Fed to go ahead and raise rates 75bp tomorrow and aggressively fight inflation. The Investor group is skewed to middle-aged folks, many of whom have experienced high inflation before. The PCE rate doesn’t come out until month-end and will likely show the same trend, and high new job creation was already leading investors to anticipate continued Federal Reserve tightening at the next 2-3 meetings.


PORTFOLIOS … After reading this report, if you are unsure what to do with your portfolio, or how to increase your cash flow, call me to discuss your circumstances and I’ll explain what ought to be done to help your situation.


If you would like a complimentary portfolio evaluation, along with a recommendation for two stocks to add to your portfolio, just click here and we will explain what’s good about your portfolio, and how it’s likely to perform in upcoming months, all at no cost to you. Alternatively, you may securely email your portfolio holdings to us (click here) and we will input the data for you.


TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018 and are doing better than the market return over the same time period.




Published every Tuesday at 12:00 noon. For more information on my investment and planning services, or to sign-up for this weekly e-Newsletter, 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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