STATUS UPDATE

And some important notes on markets

StockTips

Oct 18

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The Markets: I love being right about potential rallies. Last week I claimed that the market may pump for no other reason than the pivotal news is behind us. Sure enough, last weeks news is behind us, the market blasted upward, & the futures for Tuesday indicate (but do not guarantee) continuation. Alas this is but temporary (Remember that!).

What I Expect: People are getting slaughtered by inflation. High interest rates aren’t just hurting the housing market, but the auto market as well. Need a new appliance? Need some house work done? Have a business that operates on frequent debt? Need a loan for anything? YOU’RE GOING TO PAY! SO STAY AWAY FROM STOCKS THAT RELY ON MASSIVE AMOUNTS OF DEBT TO CONDUCT OPERATIONS!!! They will NOT serve you well amid high interest rates.

REMEMBER: Markets are forward looking! Do I expect lower lows? Yes I do! Do I expect a recession? Who doesn’t? But does a recession necessarily mean the markets will not price in equities through the following year? If history has shown us anything, its that recessions do not necessarily mean a poor performance for stocks amid the recession. This is because firms will invest with the expectations that the recession will eventually end … & its better to be too early than to be too late. Has this time come? Absolutely not! Remember that inflation may be painful today, but equities will eventually inflate as well. Eventually we will have headlines on record company revenue … but in reality … in real value … inflation will be the driver of the record revenue despite profit margins being within historical norms.

A Note on Dividends: If you didn’t read my write up on dividends yesterday, please do so. I think its important.

A Hard Landing?: Likely! The holidays are upon us and you can bet that folks are going to spend some money. Demand may increase a little driving inflation higher & incentivizing the reactive thinking Fed to stay the course. Businesses will compete for seasonal employees raising the demand for labor. At least that’s what markets will assume. After the holidays we cannot rule out that folks will have incurred a massive amount of debt … & at higher interest than traditionally expected. The tax returns thereafter will therefore likely service that debt, not stimulate the economy. Most people are horrible with money! Most people live paycheck to paycheck. They will spend during the holidays with the expectations that they will get a hefty tax return in February-March. The tax loss harvesting prior to the new year may be brutal! And the Fed is selling (QT) in an effort to rollback QE. So after the holidays I fully expect some nasty nasty markets!

With this said, please plan accordingly. Put some money away for you an your family. Attempt to save as much as you possibly can. Try to have a savings that will sustain you for at minimum 3-6 months. Keep it liquid in some sort of bond tracking ETF where you wont make much, but you wont lose much either (Its a good hedge if nothing else). I’m expecting some serious job insecurity next year. Firms will be hesitant to engage in layoffs during the holidays, but after the holidays (which is an even worse time to partake in layoffs) all bets are off. TAKE CARE OF YOURSELF & YOUR FAMILY!!!