Today I returned from a long weekend to review "The News"! Of course, all of the same old "monsters" were there!
BUT I could not find any of the real-life facts like these below in the news. Hmm…
- Markets stand at 14.6 times earnings (ex-FAANG), a great deal compared to bonds, even after the recent increase in interest rates.
- The Fed is now closer to the end of the interest rate increase cycle, much closer.
- The earnings for Corporate America, as measured by the S&P 500 remain up overall.
- Manufacturing buildout exploding.
- Over $110 Billion in new factories being built with no fanfare.
- Supply-chain is not only being fixed and rebuilt but is almost back to pre-covid levels.
- Inventories coming back to normal.
- GDP up, productivity turning up again.
- Cash flows for Corporate America are up, even after higher input costs.
- Corporate stock buybacks and dividends are on track for the highest in history. 2023 estimate is for $1 Trillion in buybacks.
In my opinion, it is 70%/30% and maybe 80%/20% that the worst of this nutty 15-month drawdown in valuations is close to over.
For perspective, if we look back to the Ukraine / Russian war the prediction was people would go hungry in many parts of the world as grain prices soared. In fact, none of that came close and grain prices today are near record lows.
Remember energy was going to spike in price and Europe would freeze in the dark. Also, a lie as energy prices have dropped 30%+ from when all that started.
Looking back to the 1990 bank failures we had 1,500 banks and S & L’s fail. As of today, we are at 2…TWO!
The red banner at the bottom of your tv screen is 90%+ made up, pure B.S.! Per the above.
Next monster up will be the debt ceiling fight which “could” cause the government to shut down. That too will be blown out of proportion.
For perspective, review this prior Weekly Update, FIVE YEAR MONEY, (read it here). This is especially important as there has “never” been a 5-year period where the market, as measured by the S&P 500, was lower over a five-year holding period.
Here at The WSG we remain focused and intentional in our intent to reduce our cash holdings as we reallocate toward conservative growth-oriented investment positions. We still have a few more monsters to hurdle, i.e., the debt ceiling debate. So, no harm in being thoughtful on timing.
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.