by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
STOCK MARKET RATING … 5.0 (0-4 bearish, 5 neutral, 6-10 bullish), my assessment of present and future market conditions remains unchanged at “neutral”.
To repeat recent comments …
Both bullish and bearish indicators of future stock prices are present, hence the overall neutral rating until conditions are clarified. Resist getting overly excited or overly reactive about any particularly bullish or bearish day. It could go either way.
Stock prices have rallied 5% in each of the last two months … stop and think about that … this represents a lot of bullish buying. A lot of people have been willing to add risk to their portfolios.
When all the above is resolved, there will be those who will say “I told you so.” Really? When it comes to the future, we are all guessing. It’s all opinion. No one knows for sure even that we will wake up breathing tomorrow. So, investing is NOT about such guessing.
Really? Then, what is investing about? It’s about identification. That’s a big difference.
There are times when the market is relatively easy to identify, and times when it’s more difficult. That’s where controlling risk comes into play. Be opportunistic when the future direction of stock prices is relatively clear and easy to understand. Preserve capital when conditions are murky. If you put on a position, or continue to hold one, keep assessing this risk-on versus risk-off paradigm. Our nation’s greatest investor frequently refuses to buy when he cannot find good opportunities, with a margin of safety.
It’s not yet clear that the rally is failing. It may be. But the release of additional bullish information could take us higher. Maybe much higher. Personally, my opinion is that the rally is likely to fail. A position that I added recently may need to be reversed, because the future remains questionable after recent too-positive economic reports. That’s ok; this is discipline.
The prevailing view of Federal Reserve policy now seems to be much more realistic to me (as opposed to being based on optimistic hopes). The current view is that the Fed will keep raising rates higher for longer (in 50 bp increments) than in previous assessments. The prior view of a soft landing is being replaced with that of a hard landing that produces a shallow recession.
The Fed does not want to tank the economy or the stock market, but it wants to get the inflation rate down. It needs to. Will upcoming inflation reports – the PPI this Friday and CPI a week from today – be favorable or unfavorable? We will know shortly.
PORTFOLIOS … After reading this report, if you are unsure how to position your portfolio to take advantage of these conditions, 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, just click here and we will explain what’s good about your portfolio, what you should consider changing, and how it’s likely to perform in upcoming months, all at no cost to 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 since that time period.
Learn from the Bible: Proverbs 15:22, 21:5, 22:3 and 27:12, Ecclesiastes 8:7, Joshua 1:9, Proverbs 3:5-6, Ephesians 1:17, 1Chronicles 29:11-13, and 1 Chronicles 12:32. I recommend you read them in this order.
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Opinions in this post are for general information only and are not intended to provide specific advice to, or recommendations for any individual, without our complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.