WAIT AND WATCH MODE

Wait and Watch

THE MARKETS

We are in watch and wait mode.

We are watching for indications that the stock market has hit bottom. Some hoped it would have already happened, but time will tell. Some strong up days over the past two weeks are a positive sign, so we’ll be keeping a close watch.

Despite the Fed’s rate hikes, the annual rate for headline inflation was 8.2% in September. That’s down from June when the annual inflation rate was 9.1%, but a long way from the Federal Reserve’s 2% target. The core inflation numbers hit a 40-year high last month!


INFLATION

Inflation expectations are important because they move the needle. Inflation has a psychological component. If people expect inflation to be higher – and behave that way – then they could cause inflation to move higher. For example, if a company expects higher inflation, it may increase prices at a faster rate than it would otherwise. If workers expect inflation to move higher, they may ask for larger wage increases than they would otherwise. As you can see, these types of actions directly affect the rate of inflation.


MEETING CLIENT NEEDS

Inflation has brought some good news for our holdings. The money market funds are now paying us while we wait, averaging between 2.10% to 2.20% in yield. I have also uncovered a one-year treasury bond that has a yield to maturity of approximately 4%. If you have a large cash pool at home with little-to-no interest, give me a call and we can commit your savings account money to some of these to improve your returns. I have placed buffers of cash, floating-rate bonds, and a lower percentage of stocks in many of our accounts, and some clients are fully invested, per their wishes. We have multiple blends from defensive to growth that have been custom-designed for you, our clients.


FOOD FOR THOUGHT

When markets are volatile, it is difficult to be an investor. Headlines shout about losses. Quarterly statements show a significant drop in the value of savings and investments. It becomes all too easy to focus on short-term market movements and lose sight of long-term financial goals.

When market volatility produces anxiety, it may help to consider the words of people who have spent decades investing successfully through bull and bear markets:

“It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.”

– Charlie Munger, Warren Buffett’s right-hand man

“The stock market is a giant distraction from the business of investing.”

– John C. Bogle, the father of index funds

“The most important thing is to stay the course – not to get shaken out of the market during a difficult time.”

– John W. Rogers, Jr., investment company Chair and CEO

“Never is there a better time to buy a stock than when a sound company, for whatever reason, temporarily falls out of favor with the investment community. When bad things happen to good companies, it must be viewed as a buying opportunity rather than a bailout.”

– Geraldine Weiss, the blue-chip stock guru


FOCUS ON MOTIVATION

Remember, America went from its greatest loss (Pearl Harbor) to its greatest naval victory (Midway) in just six months. So, plug up the leaks, trim the sails, and get going. Your effort can make a difference.



As always, I am here to answer any questions or concerns you may have. Let’s remember that success is walking the journey together!



Securities offered through Bill Spalding Wealth Management, Member FINRA/SIPC.

* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate, and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is the Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. A high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that the strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.

* To unsubscribe from the “Enter the name of your commentary” please click here or write us at “Your Address Here”.

SOURCES

https://www.bls.gov/news.release/cpi.nr0.htm
https://www.bls.gov/opub/ted/2022/consumer-prices-up-9-1-percent-over-the-year-ended-june-2022-largest-increase-in-40-years.htm
https://www.barrons.com/articles/stock-market-dow-nasdaq-sp500-51665789304?mod=hp_LEAD_2&noredirect=y (or go to https://www.bloomberg.com/news/articles/2022-10-13/asia-stocks-set-to-join-wild-ride-higher-after-cpi-markets-wrap?srnd=markets-vp (or go to https://www.sca.isr.umich.edu
https://www.clevelandfed.org/en/newsroom-and-events/cleveland-fed-digest/ask-the-expert/ate-20190528-rich.aspx
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202210
https://twitter.com/charliemunger00/status/1526174877694185474
https://www.brainyquote.com/quotes/sallie_krawcheck_899560
https://www.brainyquote.com/quotes/john_c_bogle_1119994
https://www.brainyquote.com/authors/john-w-rogers-jr-quotes
https://economictimes.indiatimes.com/markets/stocks/news/bluechip-stocks-guru-geraldine-weiss-success-mantra-bet-on-high-dividend-paying-companies/articleshow/81124897.cms?from=mdr
https://www.barrons.com/articles/stock-market-inflation-fed-interest-rates-51665776799?mod=hp_columnists&noredirect

December 2022
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031