Alone With My Thoughts – 06/01/2023
“When you come to a fork in the road, take it.” Yogi Berra. The stock market road typically has plenty of forks to take, but this year we have seen a road that gets narrower and narrower. For example, If not for the seven largest tech stocks, the S&P 500 would be negative for the year and not up over 9%. The AI inspired gold rush into tech has been pretty remarkable and continues with the recent push in Nvidia, now a Trillion dollar company. Narrow stock market leadership has not always bode well for diversified portfolios and we need to battle the FOMO of the artificial intelligence crowd. Sometimes it is good to stay in your own lane.
Alone With My Thoughts – 05/22/2023
Home buyers are feeling a bit like Hannibal Lecter, what with homeowners handcuffed to low mortgage rates. A recent Wall Street Journal article by Nicole Friedman, pointed out that the reluctance of these homeowners to sell differentiates the potential downturn in housing from other periods of rising interest rates. This idea of going from a historically low interest rate to a much higher one will most likely stunt the supply of homes for the near future. As of March 31, nearly two thirds of primary mortgages were at rates below 4%. For investors, the net effect could provide an opening for builders, an opportunity for home remodeling, and possibly dull the Fed’s attempt at to slow inflation. Moral to the story, interest rate moves, both up and down, are not without unintended consequences.
Alone With My Thoughts – 04/28/2023
The tech heavy Nasdaq has been leading the way in 2023 after a horrendous prior year performance. As we leave the month of April, the Nasdaq has gained about 16% year to date, led by familiar big tech names like Amazon, Meta, Google, and don’t forget Microsoft. The sales numbers have been impressive…Amazon clocking in with over $100 billion in quarterly sales, Google (Alphabet) with more than $60 billion, and Microsoft with over $50 billion. As the arms race for AI takes off, there seems to be cash available for the perceived next big idea. At the midway point of earnings season, about 75% of companies have beat expectations and through the first quarter, $77 billion has flowed into equities. This, along with tight employment, will hopefully portend a “soft landing” for the economy and maybe even softer inflation rates.
Alone With My Thoughts – 02/20/2023
During a recent interview, growth stock investor Cathie Wood remarked that “innovation solves problems”. That is one of the beauties of investing, entire industries seemingly come out of thin air when the times get tough. Most recently, the pandemic brought us Zoom Video which is now a $22 billion dollar household name. Think of Moderna, another pandemic problem solver. And as we come out of an unprecedented economic shutdown that inadvertently is causing a major shortage of workers, witness the lowest unemployment since 1969, Amazon is adding about 1000 robotic “workers” per day. “That means Amazon could have more robots than employees by the year 2030” continued Wood. Innovation and savings are the keys to economic growth and its hard to bet against the ingenuity that is here at home and around the world.
Alone With My Thoughts – 01/24/2023
It has been a good month for Philadelphia…Not only are the Eagles vying to be in the NFC championship game but the Philadelphia Exchange indices are leading the way in the market. Look at the PHLX Gold/Silver index up 12% year to date, PHLX Semiconductor index up 10%, and the PHLX KBW Bank index up 6%. A late day rally on Friday has helped give stocks a nice run to start the year and three positive weeks for the Nasdaq.
To quote two of our most famous traders from the Philly exchange (by way of the movie, Trading Places) Louis Winthorpe III “Looking good, Billy Ray.” Billy Ray Valentine “Feeling good, Louis.”
Data as of the close of business 1/20/23.
There is Always A Bull Market Somewhere
With stocks and fixed income both in the red this year, we continue to remind people that “there is always a bull market somewhere”, making the case for a diversified portfolio. 2022 to date has certainly tested the resolve of investors, the classic 60-40 stocks to bonds allocation model is suffering its worst performance since the Great Depression, currently down about 18%. We have had some re-assuring good news in several stocks that many of our clients own (full disclosure). For example, a huge spike in energy costs has lifted Chevron up 56% year to date. In the arena of health and bio-tech, Regeneron just recently had the first FDA approval for an eczema treatment (Dupixent)for adults. The stock is up 17% this year. With the attention and funding going into infrastructure projects, combined with high crop prices, John Deere has managed a 15% increase this year. Finally, as the Fed combats inflation with higher interest rates, regional bank NBT is up close to 24%. The point is, stocks move with the market in both bull and bear markets, but having a diversified portfolio with investments that don’t always correlate with these moves can help mitigate the risks.
Performance data as of 11/4/2022. Past Performance is no guarantee of future results.