My Thoughts for Today - Roller Coaster Ride

July 14, 2023

Life, as is the market, is a roller coaster ride. We focus on the market here of course and ride the ups and downs. Although you won't ever catch me on a roller coaster ride at this stage of my life, you will see that me ride the market down a bit, but most importantly we ride it back up. The volatility is our admissions ticket to invest in the markets (roller coaster ride). 

The COVID Pandemic and failed economic policies lead to a multi-decade high in inflation leading to an economic and financial roller coaster. Most people don't have the fortitude to ride the ups and downs. Never believe people who claim they got out at the top. Many abandoned ship after last year and missed the tremendous rebound in the first half of this year. Personally, I wasn't expecting the punch to the gut the financial markets gave us last year.

The current roller coaster ride up could be named "revenge of the growth sector". We did invest in QQQ's but thankfully we followed the trends in AI and semiconductors stocks. This trend could change and we must be prepared to take profits, remember don't believe anyone that claims they get out exactly at the top (of the market roller coaster ride). 

The trend should shift into smaller cap stocks for the second half of the year and we've been seeking opportunities in this sector.

Economically, we should expect  one more interest rate hike in July. A second hike later this year is not likely for now. To the downside, a positive and negative will likely occur: inflation will continue to decline but so will the labor market. June’s labor report was disappointing and delivered some downward adjustments to April and May’s labor numbers. I am most concerned about the average hours worked which continues to decline. Typically, employers cut back on hours before laying off staff. In general, negative job growth leads to recessions and there is a small risk of such an occurrence. It's my belief that we experienced a rolling recession across the nation and are heading for a “soft landing” for the economy.

Enjoy the rest of your summer.

Best wishes,