12:00 TUESDAY – Stock Market Report #196 – 2/20/23
by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
STOCK MARKET RATING … 6.0 (0-4 bearish, 5 neutral, 6-10 bullish. Recent economic data is sending the market in a different direction from it’s recent past (specifically the 4th quarter of 2022 and the early weeks of 2023).
Reduction in CPI inflation is losing momentum, i.e., it’s decreasing more slowly. The market now believes the Fed’s rate-hike cycle will be higher-for-longer and will lead to a longer period of slow growth. This belief has the potential to depress stock prices for several weeks to come.
The market is like an unmanned, loosely-trimmed sailboat that blows about as the economic winds constantly change course and intensity. If I were to let it, my rating would swing from 3.0 to 7.0. The best anyone can hope for is to construct probable developments through all the fog. I think inflation will resume moderating in upcoming weeks and if it does, then optimism will return with it.
However, investors should expect plenty of volatility for a while – volatility that may produce little net change in the overall market. I’m nearly fully invested in most accounts, investing previously unallocated funds to broad-based, dividend-paying ETFs in preference to individual stocks.
In taxable accounts, I intend to allocate funds into ETFs for qualified dividends and gains taxed at long-term rates, and in non-taxable accounts, I intend to allocate funds into ETFs for short-term gains and ordinary dividends. We’ll collect dividends for a couple of quarters, then as the economy heads back up, we can anticipate the opportunity for capital gains.
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, I’ll do a complimentary portfolio evaluation, and I’ll explain what ought to be done to help your situation. If you want to get started right now, just click here and input your portfolio holdings and I’ll call 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.
Excelsior Divitiae. 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.