Investing Update: Did Santa Forget Investors?
What I'm buying, selling & watching
The DOW just had its worst week since September. The S&P 500 and Nasdaq both had their worst week in five weeks. This is the worst start to a December since 1975.
That’s a lot of worsts to kickoff what’s usually the start of the annual Santa Clause rally. Instead it looks like this recent rally is going to be another failed bear market rally.
This is a big week upcoming. Tuesday is the CPI release. It will show if inflation has continued to slow or is picking up. Then on Wednesday, the Fed is likely to raise rates after its meeting.
After the last CPI release came out showing the inflation number decreased, the market ripped higher. The last time Fed chair Powell spoke, the market took off. For any hope of a Santa Clause rally and rally into year-end, there needs to be a catalyst which will likely have to come from one of these two events.
60/40 Portfolio Update
The 60/40 portfolio is still on pace for the 2nd worse year since 1976. One of the more surprising events from 2022 is how badly both stocks and bonds have performed.
Savings Accounts Offer Appeal Again
When is the last time you saw savings accounts paying over 3% interest? How about 4%. As you can see below savings accounts are finally paying interest again. For the longest time savings accounts paid nothing. They were the equivalent of having the money in a checking account. A essentially almost risk free, FDIC backed product is appealing to savers again.
Investors Say One Thing, But Are Doing Another
We’ve now seen the longest streak ever in the AAII Investor Sentiment survey. For a record 36 consecutive weeks the survey has been negative.
As negative and bearish as investors may be, that hasn’t altered their investing plan. The flows into equity funds are still continuing. Which is a great thing! These are the times people should continue to be buying if you’re focused on the long-term.
There Is Always Something To Worry About
This week I came across this historical chart from
. Throughout history investors have always had something to worry about. When we enter turbulent times or bear markets like this, I always hear "This time is different" or "We've never seen a time like this." The cause of the problem may be different but that doesn't change the resillence of the stock market and that down the road it will continue to move higher. Just like it always has.
Remember You Don’t Know, I Don’t Know, Nobody Knows
This is the time of year where you see everyone making their stock market forecasts for 2023. With that comes a lot of smart people talking like they can forecast the future and tell you what the stock market or certain stocks will do in the coming year. They’re giving their opinion and most educated guesses.
Just remember that nobody knows what’s going to happen. You don’t know, I don’t know, nobody knows. If you haven’t read my past post on this topic, this is a good time of year to do so. You Don’t Know, I Don’t Know, Nobody Knows.
Moves I’ve Made
S&P 500 Index On Wednesday I added to my S&P 500 index holding. As we still sit in this range it’s only a matter of time before we break out of this. As things continue to stay down I will continue to buy and accumulate more shares in the S&P 500.
I added this week as we’ve seen the worst week in the past 5 weeks for the S&P 500. The Nasdaq also saw its worst week in 5 weeks and the DOW had its worst week in 10 weeks.
What I’m Watching
I don’t see myself adding to any of my positions or starting any new positions unless we see a big pull back in the overall market or some individual stocks that I’m watching take a big nosedive.
There are some stocks that are just stuck in this rangebound area like the overall market. I’m not in any rush as it seems we may have missed the annual Santa Clause rally this year. Did he forget to deliver presents for investors this year? It’s sure looking so. That could still change but we’re running out of time and it seems like the bears still are firmly in control of this market.
The Coffee Table ☕
Joy Lere writes
on Substack and wrote a great post about teaching your kids about understanding money. It’s entitled The Gifts We Give Our Kids. If you’re raising kids I think this post is a must read.Nick Maggiulli wrote a nice year-end piece about his favorite investments writings through 2022 called My Favorite Investment Writing of 2022. There are some very good posts by various writers in here.
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion. Do your own research.