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August Stock and Fund Picks

August 14: In business cycle parlance, we are coming down from a peak towards a recessionary trough and appear to be nearly there. This trough is not likely to be an actual recession though as the economy is generally still too strong for that. Thus, a "soft landing" has become a common expectation. The more relevant question question is when earnings or profits will stop continuing to fall and bottom out. As it is, the approach towards a trough tends…

June Stock and Fund Picks

June 28, 2023: Because the Fed intends to carefully proceed by looking at downside (recession) risks versus inflationary risks, we can expect them to try to avoid causing a recession. But, recent strong economic activity in areas such as capital goods manufacturing, housing construction, strong service sector and a still fairly resilient labor market mean that a recession would be relatively more difficult to accomplish. This gives the Fed ample room to pursue it's anti-inflation goal. Inflation is still too…

May 2023 Stock and Fund Picks

May 30, 2023: Assuming the debt ceiling FUBAR fades into the rearview mirror, the Treasury will have to rebuild the cash reserves it exhausted during the long period of "special measures." This cash rebuilding process involves bond sales which will also be good for inflation because it will compete for excess money in the economy. Unfortunately, it will also and create an alternative to buying stocks for a time. During the second half of this year the stock market should…

March 2023 Stock and Fund Picks

March 12: In the 1930s bank runs occurred because a bank only had to keep a fraction of its total checking account deposits on hand for cash withdrawals and because bank deposits were not insured by the FDIC. Consequently, depositors could panic and try, in mass, to withdraw their funds up to the point the bank had no more vault cash or teller cash. Now most banks and credit union deposits are insured. Consequently, bank runs decreased dramatically because depositors…

December 2022 Stock and Fund Picks

December 28: The best guess as to how far along the Fed is toward raising the Federal Funds Rate is that it is about 70% complete. The most vulnerable area is equities and associated company earnings, all of which appear to have an average of about 10-20 percent more to fall. If you are throwing darts to pick equities, then I'd build up some cash and wait about 6 months or so to start buying. One upside is the equity…

October Stock and Fund Picks

October 20: The status quo seems like endless doom and gloom. Yet, we know with certainty that bear markets always end. Moreover, it's end will come as a surprise to most. One possible scenario is that inflation continues to abate and the Fed pivots and announces an end to large rate hikes. Suddenly, earnings growth and job creation are enough to send the stock market soaring. Thus, you don't want to sell. On the other hand, killing inflation requires reducing…

August Stock and Fund Picks

August 30: It appears we bottomed in June. After which July was characterized by a stronger than usual bear market rally. At this point we are back in the FED's grip of higher interest rate expectations and with no growth or value catalysts in sight that could shift us into another Bull market. Consequently, it appears that floating rate funds benefiting from higher interest rates are the most in favor. A discounted floating rate fund such as VVR that currently…