Another week, another loss for the major indexes and average.
This is not much fun and I am certain opening your monthly statement reflecting a drop in your retirement account’s value is not making your mood bright and sunny.
The question is where do we go from here?
There are many analysts giving a coming recession a greater probability.
If you think you are unhappy now just wait should that event occur.
I will say though that Friday’s bounce back did help a bit as last week was beginning to become a free fall.
I point out though that over the last decade plus, that as the markets climbed in value there were always setbacks.
Look at March 2020.
Moreover, there are weekly losses followed by weeks of gains.
Nothing in the equities market is continuous.
I only say this to note that a one-day reprieve probably is no
indication of a bottom.
Part of my concern is that inflation will not go away.
I paid $4.15 for gas this weekend. I listened to an analyst speculate that West Texas Intermediate could climb to $150.
It is hard to believe that a little over a year ago oil traded one day at negative value.
I repeatedly hear about wage growth.
Housing continues to climb in value despite recent interest rate raises.
Those increases by the Fed have moved the dollar significantly higher in value as compared to foreign currencies.
In looking ahead for investments, it seems logical to look at energy - Devon, Cotera and Chevron are perfect examples.
There is always a problem though as there is hardly an energy stock that is not significantly up from last year’s value.
It would appear that the free cash flow of many energy stocks will allow them to pay even higher dividends.
This is a trend that I see happening across the board as companies apply the significant amounts of cash to buying back stock and raising dividends.
Being paid a dividend makes it much easier to wait for this market to play itself out before jumping in to find value.
The rise in the dollar’s value should not be lost on investors.
Whether you buy an Exchange Traded Fund or an individual foreign stock, the dollar’s rise should aid these companies in competition with U.S. companies for sales.
This also will become a problem for U.S. companies in the trade war.
This week you will have earnings reports that should provide insight to the economy and profit picture for retailers.
I am not expecting much as each week just brings more things to worry about.
I hope by now most have realized the Fed will not orchestrate a soft landing.
I would say one should take off on a road trip to escape, but who can afford to pay the price at the pump.
Sometimes you just have to assess the situation and just flat cut back.
That is the only real solution to inflation.
Demand has to be reduced and that will take time.
