We have made it through what most call summer to the Labor Day weekend.
We in Texas know that is a false narrative, as there is at least two more months left in summer for those of us in the Lone Star State.
In this holiday-shortened week, we can get distracted by the new school year and the beginning of our country’s obsession with football.
That helps distract from what is going on in the Middle East, Ukraine and the upcoming mid-term elections.
While those issues matter, you need to keep focused on the market if possible.
This time of the year can be painful, as past history reflects. Some suggest that with rising interest rates, you should move more into bonds whether it’s Treasuries, corporate or municipals, given the higher yield and more safety.
One of the oldest investing concepts was to have 60% in stocks and 40% in bonds.
I saw a theory last week proposed where investors would hedge their holdings with 50% in technology stocks and 50% in energy stocks.
The concept is that technology outperforms and drives the various indexes and averages. Should there be a setback, energy would be a hedge against inflation. Instead of hedging with collectibles - precious metals or crypto - you would move into energy.
If inflation is rising, it is a safe bet that energy is climbing in price. Moreover, energy stocks are one of the highest paying dividend sectors.
I have a significant portion of my investments in energy.
I could say that I worked in that industry and understand it better, but the truth is that it has paid over the years. While I would like to think I was ahead of my time choosing energy, it was way more about yield and return.
The hedging concept though does make a lot of sense in today’s market.
Speaking of trends, the EV market hit a wall with consumers concerned over the ability to recharge their vehicles.
Hybrids were gaining favor as a bridge.
Of late, the latest concept is putting a gas engine in the vehicle, but not to power the car but to recharge the batteries. There are claims that the vehicles can go over 600 miles.
Sooner or later, companies finally listen to consumers.
I have thought of an electric vehicle, but my concerns are more directed to the fact that I hold on to a vehicle far longer than most.
Car makers have figured out planned obsolescence with electronics. You get about three years out of any electronic device.
Vehicles now contain thousands of chips.
But most don’t care as they are essentially renting a vehicle anyway and will switch out for the best rate.
We don’t get attached to things as they are gone quickly.
For those less interested in buying and more into investing, you just can’t get away from Nvidia.
They bought out Hugging Face last week to make a move to compete directly against the other AI providers like Open AI and Anthropic. Never forget that those two companies also run on Nvidia’s chips.
You just can’t avoid this stock much like ignoring Musk.
There will be much to pay attention to this week as there are primaries up East and we get inflation data at the end of the week.
There will, of course, be more earnings reports.
The PPI and CPI reports will set the course for the Treasury, as far as interest rates. I just can’t see how they don’t raise and the market will not appreciate such.
So here we are, in the fall with concerns mounting and markets at record levels. Why, me worry?