After a bit of a roller coaster up and down week, the S&P 500 ended up closing above 7800.
It did this with much to consider.
Oil prices have held just above $90 and there are more conflicts in the Mid-east with the recent strikes in Saudi Arabia.
Interest rates have yet to do anything but head higher with predictions of the 10-year Treasury to climb from 4% to over 5%.
That is just a small example and I didn’t mention the election in a couple of weeks.
This is seriously turning into a full blown Halloween scary movie.
All hyperbole aside, we will get inflation numbers this week with CPI Wednesday followed by PPI
on Thursday.
It is also the start of the earnings reports for the last quarter with the banks reporting first.
Apple will also announce new products this week.
I do want to get back to what I referenced above, stocks seem to be climbing this wall of worry.
What is happening is that these companies are making money.
For all the negative things to consider, realize that this economy is strong.
Unemployment is low and the GDP is growing.
I am not ignoring the fact that prices are higher but consumers seem to take this in stride.
I drive a diesel truck and each time I fill up, it gets my attention, but I have to get around.
I am concerned that so few stocks drive this market.
We have been living off the backs of the Mag 7 and couple more for several years.
In fact, this four-year bull market is all about those stocks’ leadership.
If you look at those stocks in particular, you won’t find them doing anything but posting great earnings with projections for future growth.
I have had several friends with no stomach for this market and purchased tax free bonds and some bond funds.
In this rising interest market, the bond funds are underwater.
The face value of the bonds has dropped but you can hold to maturity.
I have no problem with capturing a tax-free yield above 5% as long as when you buy the bonds you don’t pay a premium above the face value which is $1,000 per bond.
If you did pay more, you will lose that premium at maturity.
Do yourself a favor and never pay a premium for bonds, always at par or below.
That after-tax yield around 7% may not rival your stocks but it is just fine.
We will get so much information over the next several weeks that I wish I had a great plan to alleviate any concern as to your investments.
Well, I am not that smart.
Smart enough however to realize this too will pass sooner than you can believe and we will be off to the next set of events.
In this day and age, it comes at you like a fire hose.
I am not saying to ignore but to take it for what it can be more times than not, it is just noise and probably and more realistically will not impact you.
That is not to say that we will not experience some setbacks.
Just make sure you are ready for them.
Have cash reserves and play for the long term.
It makes sense after a four-year run that the market will correct but that does not mean gloom and doom.
We made it through multiple pullbacks before.