Timely Information

November 14, 2022

Happy Monday!  After such a dreary weekend, I am excited for a fresh new day. Of course, who couldn’t start the week excited about the markets after such a great week in the markets.  Politically, neither party has a lot to be upset about. Optimists can find positive news and pessimists can do the same.  All in all, for me, last week was pretty terrific on all fronts.

Here’s a super quick recap of last week. The S&P 500 railed 5.9% last week for its best week since June. This was mainly due to the CPI (inflation) coming in lighter than expected, which investors believe means that the Federal Reserve would soon slow down its aggressive tightening campaign (75bps each meeting).

The Nasdaq Composite gained 8.1% last week, its best week since March. The higher gain in the Nasdaq versus that of the S&P 500 indicates that investors are increasing their risk exposure across assets classes. Technical indicators also improved dramatically, with investor sentiment, momentum, and breadth of gains all showing notable improvement.

Over the weekend, a Federal Reserve speaker cautioned against the belief that inflation has peaked. This has caused the markets to indicate lower, but thankfully lower by less than 1%.  In terms of inflation, it is notable that big funds have kept inflation hedges in place.  It seems that big funds don’t think inflation has peaked.  Technical analysis also confirms that last week as a bear-market ralley.  

What does all this mean to your portfolio? CWM’s goal is to give its clients peace of mind.  Clearly, trading on a daily or weekly basis once a portfolio is in place would not achieve this goal.  Depending on your specific financial goals (income versus wealth accumulation), time horizon (one year versus twenty or more) and whether your investments are in a taxable versus tax deferred account, CWM’s advice varies.

For those who have a significant of money in cash & cash equivalents, we are looking for a day when the market takes a significant downside. We don't believe we've hit the bottom. However, we'll only know when we've hit the bottom by looking through the rear view mirror. Therefore, we want to take advantage of down days. Today doesn’t seem to be shaping up to be that day.  Furthermore, I would like to see more indicators that inflation has hit an inflection point.  Of course the trick would be to realize this before the big funds.  That has been our classwork and homework!

1) Capitalize on your plan's deductible, if you've reached your limit (eye exams for all!)

2) Check your flexibly spenidng account; don't let that money be forfeited.

3) If you itemize your deduction, you might be able to get a tax break; figure this out before it's too late!

4) Workers with health savings accounts who haven't maxed out contributions...do so before the end of the hear to lower your taxable income.