Inflation Progress has Stalled – WHY?
There were two inflation readings released this week (CPI and PPI) that threw cold water on the idea the inflation fight is all but over and that the Fed would soon be lowering interest rates. In response, bond yields spiked and stocks retreated for the first time in five weeks. Below is a graph of…
Curb Your Enthusiasm
The stock market is on fire and the Mag Seven are rising in anticipation of strong AI induced earnings gains. Nowhere is this more apparent than in the PE valuations of large cap technology stocks like META, Alphabet, Nvidia, Amazon, Apple, and Microsoft. With all the hype and stratospheric expectations, sometimes it is important to…
The Magnificent Seven – is it justified?
If you’ve been paying attention to the stock market and financial media, you have very likely heard of the Magnificent Seven (also known as the Mag7). Before going further, let’s itemize the companies that comprise the Mag7 stocks. They are: 1. Meta, 2. Nvidia, 3. Microsoft, 4. Amazon, 5. Apple, 6. Alphabet, and 7. Tesla.…
What is Risk?
With the advent of “Modern Portfolio Theory” (MPT) introduced by Nobel Laureat Harry Markowitz in 1952, the investment industry has dedicated a MASSIVE amount of resources to managing risk over the past seventy-five years. Academic discussions about risk, including the sometimes esoteric statistical “language” used to describe risk, is most often inaccessible to the general…
More Confounding Mixed Signals
We concluded 2023 on a hopeful note, seeing a fourth quarter broadening of equity market participation with solid returns to former laggards: Namely, small/mid cap stocks and dividend growers broadly participated in the fourth quarter market rally. The markets were trading on the view that inflation was conquered, the soft landing was a done deal,…
Burning questions Into the New Year
As we enter 2024, here are the predominant questions related to the economy and capital markets: Will the economy avoid recession as presently expected? Will the Fed cut interest rates as presently expected? Will corporate earnings grow 10% as presently expected? Will equity market participation broaden away from the “Magnificent 7”? We could list more,…
Let’s See How Far We’ve Come
As we close out the year 2023 and anticipate the arrival of 2024, it seems appropriate to look back and then look forward in anticipation of the New Year to come. Currently, stocks are yet again experiencing a textbook “Santa Claus Rally,” taking the US stock market within a whisper of all-time highs. The last…
Financial Fitness Part II
Last week we wrote about financial fitness, drawing parallels between physical fitness and financial fitness. With physical health, achieving fitness comes from a combination of discipline in both diet and exercise. Even if one is diligent with physical fitness, all that hard work can be undone with poor eating habits. With financial health, achieving…
Financial Fitness
Many people think of the December holiday season as a time for family, loved ones, celebration, and good food and drink. Especially this time of year, discipline seems to take a back seat to enjoyment, much to the chagrin of fitness experts and medical professionals. If you have spent some time in your life…
Welcome December!
As we await the arrival of December and a possible “Santa Claus” rally, here is what markets have produced year-to-date through Friday, November 24th: As you can see, large cap tech stocks (NASDAQ and S&P) have dominated the capital markets while small caps and bonds have substantially lagged. In a year like…
Thanksgiving Week
As we enter a trading week interrupted by Thanksgiving, it is a good time to take a pause and survey the broader economic picture. Here are the important drivers: Inflationary pressures continue to recede; but there is some stubbornness to it. The Fed continues to be vigilant with its tightening policies and rhetoric. The…
Priced for Perfection
Immediately below are a series of stock market index returns for the year-to-date period ended February 23, 2024. The S&P and NASDAQ are in a dead heat lead while other indexes lag. Here are the big takeaways from the chart below. 1) The equally weighted S&P 500 Index lags the S&P by 4.5%. This is…