BY CARTER E. ANTHONY, CFA
I don’t like roller coasters. Never have, never will!
In 1962, on the Key Club Convention to Long Beach, Calif., we visited a huge amusement park. It had a roller coaster that “rolled and coasted” right on out over the Pacific Ocean.
I couldn’t imagine riding it. Young sailors assigned to the NAS there were getting off of it and running to get back in line. In 1984, in Disneyland, I walked up the crowded person-to-person stairway to the top of the Matterhorn to ride down with our youngest daughter, then six.
At the top, as we started to slip into a bobsled, without a word she turned and started back down the walkway against the flow of the crowd. I was relieved! The two older daughters rode it down screaming and laughing all of the way.
In 2022, the stock market has been on a roller coaster! From the Dow’s peak of 36,799.65 on Jan. 4, 2022, it fell to its lowest point of the year, 29,590.41, on Sept. 23. At that point it was down 7,209.24 points, or 24.36%, in bear territory. Numbers from the roller coaster:
Jan -3%, Feb -3%, Mar +3%, Apr -5%, May -0, Jun -7%, Jul +7%, Aug -4%, Sept +9%, Oct +14%, Nov +2% (mid-month)
As an investor, we want to shout, go down, go down, get it over with. This is Chinese water torture!
From being down 24.36% in September, the Dow is now down only 7.32%.
On the contrary, the broader S & P 500 is down 16%. In mid-2021, the technology sector amounted to as much as 23% of the S & P 500.
Could this be an indication that investors are turning away from tech stocks and investing in the more value-oriented stocks of the Dow?
Analysts are attributing the strength in the Dow to less concern about inflation. The CPI trended down to 0.4% in October after having run 0.7% and 0.8% in previous months.
With the CPI trending downward, hopes are that the Fed will lift its foot off of the interest rate gas pedal somewhat.
Earlier in the year, a member of our investment group predicted supply chains woes would lessen as the year progressed with more goods being produced and more trucks on the road.
Another member, who follows commodity prices closely, said coffee and lumber prices are approaching pre-pandemic levels and corn and wheat prices are softening.
Still another said he expects to see this roller coaster, sideways stock market, continue for the foreseeable future.
Third quarter GDP came out as having grown 2.6%. After the announcement, President Biden, over an ice cream cone, pronounced the economy is strong as ****.
Reading the teleprompter, he touted the growth in the GDP as a result of the policies he and his team have put in place.
This after trying to dis-member and re-define GDP when two previous consecutive quarters of negative GDP indicated a recession was at hand.
Shades of President Obama after he touted third quarter 2014 GDP growth of 5.2% as a result of his team’s policies in the middle of the slowest expansion in years.
GDP growth fell back to less than 3% for the remainder of his term. He never mentioned GDP again. Politicians!
As a veteran of inflation and recession wars for 50 years, I frankly believed the worst with inflation running at an understated 7%-8% and a hawkish Fed in place.
I have softened my stance somewhat and put some money back into the market in good dividend-paying value stocks. At least, we might earn something while the market “rolls and coasts” sideways.