For all of us who have waited for a correction, we will have to wait longer.
The various indexes and averages have climbed for over a month.
The measure I watch is the S&P 500 stock-index that climbed to nearly 4200. Calls for 4400 at the end of the year almost seem far too conservative.
Last Friday, the employment report reflected over 500,000 of new jobs and an unemployment rate of 3.4%. That all happened with the Federal Reserve raising the Fed Funds rate another 25 basis points to put the Treasury yield between 4.5 and 4.75%.
Chairman Powell indicated the fight against inflation was not over and there would be more interest rate increases.
He literally indicated that beating inflation, if a recession was caused, would be something that we would have to live with.
It seems unreal that companies can announce less than stellar earnings and the stock climbs in price.
I don’t know what your definition of a bull market is, but we are surely experiencing a demand for equities.
The one problem I have is there are stocks climbing double digits in value and have poor earnings and little or no prospects to improve.
That makes you begin to worry.
You cannot have sustained bull market unless there are increasing earnings.
The price-to-earnings multiple is still higher than historical averages.
Another problem is that while people are being hired, their wages don’t keep up with inflation.
More troublesome is the fact that productivity has fallen.
What happened is that the service sector is coming back on line as the benefits to stay at home are gone.
Furthermore, the concept of working from home is disappearing and may soon be a thing of the past like wearing a mask.
As an investor, the question is what are you to do?
You are starting to get a reasonable yield on your savings.
We will get above 5% and that will pull money off the table.
I am not saying everything will go into interest-bearing instruments, but there will be more leading back to the 60% equities and 40% debt. That will dampen demand for stocks.
I say that but you continue to see investors pouring money into crypto currency and stocks that haven’t got a chance.
A perfect example is Bed Bath & Beyond.
They are a breath away from filling bankruptcy but have risen 20%.
There is such a mania for just trading in stocks instead of investing.
This has happened before in real estate and it didn’t end well.
I won’t purchase any stocks currently as there is little that is a bargain for me.
Stocks weren’t a bargain six weeks ago, but you could have made a significant profit in that time had you had the courage to invest.
I have admitted that I am not a trader but an investor. Some of my best calls have been doing nothing.
Patience though is a difficult virtue to cultivate.
It isn’t exciting and while it may not make you fast fortunes, it can prevent significant losses.
