did we see less yet?
Well, we’re oversold and due for a rally. overdue, really. (stop me if you’ve heard it before…)
Assuming we get the boom, I’m Even then Interested sell any rips more that we see.
some day We will buy this dip. Heck, we’ll back up our dividend truck. I don’t think it’s time yet.
First, I’d like to see an improvement in the breadth of the market below the surface. Often this happens which usually happens before the market bottoms out. We see individual stocks begin to “act better” than the Dow or the S&P. These leaders quietly fix their climb and start rallying.
Unfortunately, the breadth of the market still stinks. just 14 in stock S&P 500 Extended last Thursday. (How about those odds…)
Betting on rebounds (buying dips) works well when the market is trending higher. But when they crash, these lovely strategies land investors in big trouble.
Let’s be safe, keep cash, and Wait! To the other side of this mess.
“We have been applauding the cash in these pages since the beginning of this year. As the Federal Reserve prepared to halt its money printers, we opponents booked profits and piled up dollar bills.
We need to be nimble and ready to buy. The best deals happen at the end of bear markets.”
I offered some space below my mattress For those who needed it. Anything To prevent a fellow contrarian from buying a “safe” bond fund that was about to come up.
Ever since your income strategist started shipping mattresses:
- S&P 500 dropped another 10%.
- The “safe” bond ETF TLT, from iShares, flopped 4%.
That column seems like forever, but it was only three weeks, Three weeks! Either we’re all getting old in the dog years, or the stock And bonds are Too crashed. (maybe all of the above?)
The problem with a crash is that it’s like a fall after the age of 40. Or 60. Or 80. Things break. (Compare with our kids, who carry tumbles that’ll put me on the shelf for a year.) I worry the economy is going to take a toll. already Collateral damage suffered that will become apparent down the road.
I hate to bring up 2008 but it was the last time the fed funds rate was as high as it is projected to go forward. That year began with a collapse in the stock market and ended with the financial system on the ropes.
I’m not saying it’s going to happen again, but there are troubling similarities. We need to be alert.
High interest rates broke the economy back in ’08, And then other things broke down. The initial setup is now the same. The chairman of the Federal Reserve is Jay Powell eventually Tightening policy at a meaningful clip.
How high will the rates have to go? nobody knows. I just know it’s a runaway rate train that we should keep avoiding.
This income is difficult for investors. We usually mix bonds and stocks together so that we can retired on dividend,
The problem for bonds is that rising interest rates affect bond prices because they provide “coupon competition”. Income investors tend to be impatient with their current holdings, which do not look as good when compared to other options. They look elsewhere, and that selling brings down prices.
The problem for stocks is that higher rates make our stock’s future profits worth it. low, A stock is only as good as the sum of its future profits, at some discounted interest rate. The lower the rate, the more valuable future cash flows are.
The problem now is that the discount rate is increasing. they are future cash flows low Precious. That’s why the market is sinking.
cash Best thing to wear today. It seems counterintuitive in a world where inflation is running 8.6%, but it is very It’s Hard to Pick Winning Stocks bear Market.
and this is Impossible To find a successful long strategy a to crash Market. Think about 2008. Only the US dollar and US Treasury received assets.
but there are treasures No Answer in 2022. Bond market halving in 2022 Worst start since 1788, According to a leading economist at Nasdaq.
Markets usually overshoot upwards And In the below direction. To use a technical term, the S&P 500 doubled in March 2020, silly, But it happens.
The end of this bear market will be equally absurd. The biggest losses are usually reserved for the end of a bear move. We call it “capitulation,” when everyone throws in the towel and sells.
If the Fed is able to bring inflation under control, then bonds will be down before stocks. This will set a cap on rates and a cap on bond prices. I Bonds have been bearish For more than two years—I look forward to renewing our relationship with fixed income when the time is right.
When it happens, you’ll hear from me. Until then, you’re welcome to deposit cash under my still-outperforming mattress.
Brett Owens is Chief Investment Strategist Contrarian Outlook, For more revenue streams, get your free copy of their latest special report: Your Early Retirement Portfolio: Huge Dividends—Every Month—Forever,
Credit: www.forbes.com /