Down goes the Dow

75 basis points the expected Fed rate increase tomorrow.

And then 50 points more next month.

Surely we can expect bonds and CDs paying interest well over 5% by early next year, no?

fascinating day today - massive cross currents.

rumors that China will open = inflationary increase in demand but deflationary increase of supply. Balance out to zero?

job data positive today - suggesting the economy is not losing any momentum at all. recession watch is off for today. A strong economy is usually good for stocks... but will force the fed to go higher for longer, which is bad for stocks and bonds.

GDP Now sees 4Q GDP as a very strong +3%. Same issues as above.

Just crosscurrents all over the place.

So market opened strong but lost it all when strong jobs data came out. Bonds flat, value beating tech again (as it usually does when the economy looks strong)

I'm reducing duration in bonds and still moving into value.

closer to 5% but I doubt 'well over' 5%. But in that range, yes. I'm using a short term corporate bond ETF that seems to be paying over 5%. But there is risk of loss in bonds of course and not in a CD.

Not only did the Dow have its best month since 1976 but it just had its best October EVER. Not only that but when the Dow has a really good October there is a high likelihood that it will do really well over the next 3-, 6- and 12-month periods.

kiplinger.com

In October, Stocks Soared. Is the Bear Market Dead?

@Kiplinger

Historically, a boffo 10th month of the year for the Dow has led to even more outsized returns going forward.

Link:www.kiplinger.com/investing/in-october...

Agip, what do you think about ibonds? I am not a bond guy, equity all the way, but they are paying about 9.62%. That seems crazy high.

they're great - what's not to like? The lockup is a problem and the limits on how much you can invest reduce their usefulness, but hey risk free bonds that keep up with inflation? All good.

Of course they are exciting now at these high interest rates but we'll care a lot less when they pay 2-3%. Although that will still be better than savings accounts so it's fine.

I've been stashing money in them every month. Plan is to make them my emergency fund.

There are simple workaround regarding the annual limits as I have posted here before (read: gifting).

The 9.6% rate is in effect for the next 6 months, true, but if you buy now, you will be getting something in the mid 6% range. The rate changed for anyone purchasing after last Friday night. The rate is still good,, just not the 9.6% good, except for existing holders.

The lock-up is 12 months only, and after that there is just a slight interest penalty of loss of interest for the previous 3 months of interest earned prior to the cash-in date if the bond is held for less than 5 years.

let's see what's happened over the last 3 months. Sort of short term but let's see if anything stands out.

Energy +16

SARK +8

Vanguard momentum VFMO +4

Hussman +3

COWZ +1

Financials +1

Healthcare +1

Value 0

ST Bonds 0

Schwab Div SCHD 0

Industrials -1

Staples sector -2

ST Junk -2

ST TIPS -3

Sm Caps -3

ST Corps -4

Materials -5

Weed -5

Retail -5

Junk -5

SP500 -6

Treas -7

Gold -7

Global 60/40 -8

TIPS -8

Utilities -9

Clean energy -9

Non-US developed -10

Cons Discr -10

PTON -11

tech -11

Invest Corp Bonds: -11

BTC -12

Emerging -13

Comms sector -14

REITS -15

ARKK -15

GME -17

TSLA -23

China -29

Mostly the same thing we've seen all year....

easy to hide out in value and dividend funds. Tech has continued to be a loser.

Put another way, buy old economy stuff...energy, healthcare, industrials, financials.

easy to beat global benchmarks if you stayed out of anything not USA. What a disaster overseas.

Clean energy trading down with tech rather than up with energy. Will be interesting to see if /when that switches.

junk continues its unlikely streak of beating investment quality.

at some point consumer discretionary will be a great buy. americans have continued to spend and they will likely continue to do so.

China is a black hole. Although there are rumors they are giving up on covid zero, which would help their stocks, I think. Can't china just buy 2 billion shots from Moderna and end it in a six weeks? Ach, bad government.

All in all, the market is working mostly how it should in times of uncertainty...rewarding earnings being received now vs earnigns being received way down the road.

I'm looking to see when ST bonds start making money again. that would signal that the market doesn't see significant fed hikes. They;re up to zero for 3 months...getting there. At a 4% yield they should be profitable soon.

I should point out the outperformance of small caps...some of that is just a bounce, but often small caps lead the market out of bear markets. Certainly they benefit from the strong dollar in how they can buy raw materials cheaper but still sell in dollars.

I am defintely not betting that the next several months will see the market doing really well.

New inflation rate is 6.48% as of today but they also bumped the fixed rate from 0% to .4% for a combined annualized rate of 6.89%.

Igy and you will both be predicting that the next few months will be bad.

And you and most others here predicting (or praying) it will be good.

And based on history there is like a 82% chance that it WILL be good.

Igy - based on the historical stuff I posted, would you agree that it is highly improbable that the next 12 months will be bad?

Probably so.

So you think Igy's opinion will cause the market to move in the opposite direction

There is 0 correlation between a monthly price return and the following 12 month price return.

Evidence actually correlated to future investment returns is decidedly slanted to the 18% rather than the 82%. Those that believe a Fed pivot saves markets will also be betting against history.