The market’s having a trying month. Fortunately, we are attuned to the economic reports that are coming out daily and will safeguard your portfolios by adjusting to the news.
Jerome Powell, Chairman of the Federal Reserve, repeatedly has confirmed the intention to continue to raise interest rates in order to stem rampant inflation now running at close to 8%. The Fed seeks to achieve a target 2% inflation rate. Economist Steve Hanke, Senior Fellow at the Cato Institute and longtime professor at Johns Hopkins University, warned this week that we should expect a “whopper of a recession” in 2023. He bases his prediction on “unprecedented growth” in the money supply since the Pandemic.[1]
The Dow Jones, Standard & Poors 500, and NASDAQ indices all are down 3.5 – 4.5% this month, affecting all market sectors except energy, which has risen at the same time that prices at the pump have been on a steady decline.
On the other side of the coin is the news that the money supply has, in fact, leveled off since February. Volatility in the market has begun to trend downward, non-farm unemployment is just 3.5%,[2] and corporate profits have been fairly solid in the U.S. as well as in Europe. Although the market has been negative all week, the downward movement appears to be moderating today.
So what does this mean to you, the investor? Today there are many market sectors that appear to be attractively priced. As we believe that the risk of missing the upside recovery may be greater than the risk of missing the bottom of the market, we will continue to look for opportunities to place your funds where you can derive the greatest benefit. The bottom line is we have a plan and will continue to monitor and adjust your portfolios to navigate the difficult market we are now experiencing.
Motley Fool wrapped up Foolfest, its annual investment conference, yesterday, emphasizing optimistic views on a number of individual stocks. We also see some room for guarded optimism and continue to advocate that one should engage primarily in index and ETF investing. We will track the trends and invest your funds accordingly – on both the long and short sides of the Market. But we will continue to let the experts pick the individual securities that populate these funds.
As I write this at 3:00 p.m., the RFS Growth Model is ahead of the S&P 500 Index by greater than 7% for August. Our triple short ETF positions comprise 45% of the Model and have significantly enhanced our performance. This is why you rely upon RFS. We thank you for your continued confidence and support.
[1] CNBC Interview, August 29, 2022
[2] United States Bureau of Labor Statistics news release August 5, 2022