OmniDivitia Wealth Management, Inc. - ODWM Blog #valuationOmniDivitia Wealth Management, Inc. - ODWM Blog #valuationhttps://www.omnidivitia.com/blogs/tag/valuationSun, 12 Apr 2026 15:57:54 -0700http://zoho.com/sites/<![CDATA[Is this the Speculation Era?]]>https://www.omnidivitia.com/blogs/post/is-this-the-speculation-era

The Buffett Indicator: A 25-Year Rollercoaster Ride for Market Valuations


In recent years, there has been some concern about the stock market's seemingly high valuations by common fundamental measures, yet it still seems to climb higher.  Rather than debate right or wrong, I thought a deeper dive on a popular indicator could be worthwhile.  Years ago, Warren Buffett discussed some metrics he found valuable in an interview, and soon after the "Buffett Indicator" was born.

A comprehensive analysis of the Buffett Indicator over the past quarter-century reveals a market that has navigated dot-com euphoria, weathered a devastating financial crisis, and surged through a pandemic-induced recession, pushing valuations to historic highs. The indicator, a favored metric of legendary investor Warren Buffett, provides a stark, big-picture view of whether the U.S. stock market is, in his words, "cheap" or "expensive" relative to the nation's economic output.1

The Buffett Indicator is calculated by dividing the total market capitalization of all U.S. publicly traded stocks by the country's Gross Domestic Product (GDP).2A ratio of 100% is often considered a baseline for fair valuation, where the stock market's value aligns with the annual output of the entire economy.3 Levels significantly above this threshold suggest potential overvaluation, while those below may indicate that stocks are undervalued.

Here is a 25-year chart of the Buffett Ratio, using the Wilshire 5000 Total Market Index as a proxy for the total market capitalization and the U.S. Nominal GDP.

The Buffett Ratio: 2000-2024

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YearWilshire 5000 (Year-End)U.S. Nominal GDP (Billions)Buffett Ratio (%)
200014,751.64$10,284.80143.4%
200111,447.80$10,621.80107.8%
20028,793.30$10,977.5080.1%
200311,333.30$11,510.7098.5%
200412,485.40$12,274.90101.7%
200512,963.70$13,093.7099.0%
200614,603.90$13,855.90105.4%
200714,849.50$14,477.60102.6%
20088,996.90$14,718.6061.1%
200911,211.50$14,418.7077.8%
201013,111.40$14,964.4087.6%
201113,061.30$15,517.9084.2%
201214,792.80$16,155.3091.6%
201319,706.03$16,768.10117.5%
201420,812.80$17,427.60119.4%
201520,587.30$18,120.70113.6%
201621,796.60$18,624.50117.0%
201726,273.40$19,390.60135.5%
201824,795.10$20,580.20120.5%
201932,948.41$21,433.20153.7%
202039,081.44$20,953.00186.5%
202149,279.30$23,000.00214.3%
202240,323.50$25,462.80158.4%
202349,019.80$26,949.60181.9%
202459,833.50$29,200.00204.9%

Note: 2024 GDP is a projection.

Analysis of the 25-Year Trend

The chart vividly illustrates the dramatic swings in market valuation over the last two and a half decades, punctuated by major economic events:

The Dot-Com Bubble and Bust (2000-2002): The 21st century began at the peak of the dot-com mania, with the Buffett Indicator at a then-lofty 143.4%. The subsequent crash of technology stocks brought the ratio plummeting to a low of 80.1% by the end of 2002, signaling a period of significant undervaluation.

The Calm Before the Storm (2003-2007): The market then entered a period of recovery and relative stability. The Buffett Indicator hovered around the 100% mark, suggesting a fairly valued market in the years leading up to the next major crisis.

The Great Financial Crisis (2008): The collapse of the housing market and the ensuing global financial crisis sent the stock market into a freefall. The Buffett Indicator reached its nadir for the 25-year period at the end of 2008, hitting a deeply undervalued 61.1%. This marked a prime buying opportunity for long-term investors.

The Long Bull Market and Rising Valuations (2009-2019): A decade-long bull market followed the 2008 crisis, driven by low interest rates and steady economic growth. During this time, the Buffett Indicator steadily climbed, surpassing the 100% mark around 2013 and continuing to ascend, indicating that stock market growth was outpacing GDP growth. By the end of 2019, the ratio stood at a historically high 153.7%.

The COVID-19 Pandemic and Unprecedented Highs (2020-2024): The brief but sharp market downturn at the onset of the COVID-19 pandemic was quickly followed by a massive infusion of government stimulus and a surge in investor enthusiasm, particularly in the technology sector. This propelled the Buffett Indicator to unprecedented levels, reaching an all-time high of 214.3% at the end of 2021. After a pullback in 2022 amid inflation concerns and interest rate hikes, the indicator has since rebounded and, as of the end of 2024, stands at an elevated 204.9%, a level that historically suggests a significantly overvalued market.

In conclusion, the 25-year journey of the Buffett Indicator showcases a market that has repeatedly cycled through periods of boom and bust. While it is not a tool for timing short-term market movements, it provides invaluable long-term perspective. The current elevated reading suggests that investors should proceed with caution, as history has shown that periods of extreme overvaluation are often followed by market corrections.


Disclaimer: At least some of this content was created with the assistance of artificial intelligence (A.I.).  Please be sure to do your own research &/or contact your financial advisor regarding your specific situation.

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]]>Fri, 06 Jun 2025 14:07:09 -0500<![CDATA[The Soft Stuff Matters]]>https://www.omnidivitia.com/blogs/post/the-soft-stuff-matters A thought on your portfolio's "total return."  (If you were told there would be no math today, I apologize in advance.) ]]>

The Magnified Impact of Investor Sentiment

A thought on your portfolio's "total return."  (If you were told there would be no math today, I apologize in advance.) 


Total Return has two parts to it:  appreciation & income.  If  you view owning a stock like you are an owner of a company, you want it to be profitable and have solid cash flow.  That perspective makes it easier to focus on the yield generated in your portfolio (dividends and interest).  However, as an investment, you also consider appreciation, which can be much more speculative, or at least fickle in nature.  


Think of something as simple as the P/E ratio, which is just another way of saying how much you're willing to pay for an investment for every dollar of a company's earnings  It's one representation of investor sentiment.  Why is this important?  Because uncertainty impacts investor sentiment in addition to the potential impact on corporate earnings.


Consider the two investors below.  Let's assume that the S&P 500 is around 6100, and both use research that shows the estimated earnings for the S&P 500 will be $280 over the next 12 months ("forward earnings").  This puts the forward P/E at roughly 21.8.

Photo by Icons8Team on Unsplash

Ryan wants to manage his portfolio risk.

Ryan is 30 years old, is a high earner, and has some additional cash that he would like to invest.  However, he is also concerned that the market is going to come down significantly for a number of reasons, so he doesn't want to invest right now.  Instead, he guesses that the forecasted earnings for the S&P will only reach $260, not $280.  Not only that, but Ryan isn't willing to pay the same amount for those earnings.  He will only invest if the forward P/E ratio reaches 20.  So because of his conservative nature, he doesn't want to invest more in stocks until the market comes down to 5200.  So even earnings estimates go down by about 7%, Ryan needs to see a drop of 14.75% before he feels comfortable and confident that he can get a reasonable return.

Photo by Austin Distel on Unsplash

Austin wants to be more aggressive.

Austin is also 30 years old, is a high earner, and has some additional cash that he would like to invest.  He has some concerns about the current market, but is more optimistic than Ryan.  While he also thinks that forecasted earnings will only be $260, he is still willing to pay $21.80 for every dollar in earnings (P/E ratio of 21.8), so he plans on investing more if the market pulls back to 5668 from 6100 (a decline of 7.08%).

Are you more like Ryan or Austin?

There is no "right" answer.  Math can tell you what you may "need" to do given certain conditions, but are those conditions actually right for you?  This is why the "soft stuff" matters; it helps you understand your investing style when the market gets tough - because it will.  In a world where we talk about love languages & attachment styles, it is just as important to understand what works for you and how you want to move forward - financially speaking, of course.  


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]]>Tue, 25 Mar 2025 17:38:24 -0500<![CDATA[Crazy Ivan!]]>https://www.omnidivitia.com/blogs/post/crazy-ivan

Data Signals Potential Slowing Growth

In a post dated 4/5/24 titled "The Stubborn Soft Landing", I wrote the following: "A soft landing is - unofficially - when monetary policy makers both slow the pace of economic growth and reduce inflation without causing a recession.  So far, that appears to be the most likely scenario.  I think even a mild recession, or a "soft-ish" landing, could be understandable at this point.  One factor I have been monitoring has been the unemployment rate, which is beginning to rise slightly despite being near historic lows."  Since then, unemployment has risen from 3.8% to hover between 4.0-4.3% range for several months.  Monetary policy had appeared to do its job for a soft landing.  However, more recent fiscal policy has caused a distinct change of direction.  


Many of you may have heard me previously describe the US economy like a submarine; it's massive, has tremendous momentum, and can change directions, but doesn't turn on a dime.  Likewise, we have received signals, like a sonar ping, that help tell a story.  These tariffs, however, seem to have caused the economy & markets to be more like a "Crazy Ivan" (a hard turn made by a submarine to check its blind spot and potentially gain a tactical advantage, made famous by The Hunt for Red October by Tom Clancy).



Ping #1 = The Federal Reserve

The Federal Reserve's outlook for 2025 according to the December 2024 Summary of Economic Projections called for slightly higher inflation, rising unemployment, slower GDP, and 1-2 possible rate cuts in order to support the economy.  The Federal Reserve Bank of Atlanta also created an estimate of GDP for 1Q25 through an analysis of current data.  The GDPNow estimate showed a contraction from 2.9% on January 31 to (1.5%) this week, due to reports reflecting softer consumer spending, lower consumer sentiment, & fewer capital expenditures than expected.  There is also a concern about companies front-loading their imported goods before the tariffs take effect in April in order to take advantage of lower prices.


Ping #2 = Wall Street Revisions

Wall Street firms are also beginning to lower their year-end targets for the S&P 500.  Within the last few days, RBC changed from 6600 to 6200 (-6%); Goldman Sachs changed from 6500 to 6200 (-4.6%); & Yardeni Research changed from 7000 to 6400 (-8.6%).  At the start of the year, firms were calling for double-digit market growth.  Just these revisions changed from an average of almost 14% down to about 6.5%.  However, they also called for a possible contraction in 1H25, although the reasons for it varied.  The catalyst for the contraction has been the tariffs/trade war, which was not necessarily expected.    When factoring in the revised targets, after a 10% correction, the math shows that these firms are calling for an average recovery of 18.4% in the second half of 2025.  It sounds that they believe the rebound would likely be sparked by the resolution of the trade war, but a clear catalyst to that sort of growth in 2H25 is undetermined at this time.

Ping #3 = Investor Sentiment

Your portfolio's total return has two components:  appreciation/depreciation & income.  Less confidence in the stock market usually leads to an increased focus on generating portfolio income (dividends & interest).  However, lower investor sentiment also could lead to contraction in the Price-to-Earnings ratio.  The P/E ratio basically shows how much an investor is willing to pay for an investment for every dollar in earnings that investment generates.  Given the above points, it would be logical to think that earnings would be negatively impacted, so investors wouldn't be willing to value the investment the same as they did before.  The greater the uncertainty, the more an investor would want to be compensated - which usually means a lower purchase price (i.e., market depreciation).


So, if you have more uncertainty regarding the stock market than you did a month ago, you might want to be compensated for taking on additional risk by investing more at lower prices, depending on your personal goals, circumstances & risk tolerance.   

American Association of Individual Investors (AAII) Sentiment Survey for the week ending 3/12/2025.




Conclusion

There is a lot of uncertainty presented in today's markets.  With the right plan in place, we can work together to help guide you through these times with a sound strategy that is tailored for you.  If you want help navigating all of the noise, click the button below to schedule a time to speak.

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]]>Tue, 18 Mar 2025 14:24:09 -0500<![CDATA[The Stubborn Soft Landing]]>https://www.omnidivitia.com/blogs/post/the-stubborn-soft-landingAre we actually on track for a "soft landing"?]]>

The Battle Against Inflation is Not Over

The S&P 500 is up just roughly 25% since late October, and the other benchmarks have also continued their momentum. The improvement in forward earnings estimates would appear to justify the growth. Other styles have also performed well. The underlying sentiment seems to be that a soft landing was likely, and the Fed would cut rates numerous times this year to keep the economy from slowing too much.


However, hopes for rates cuts by the Federal Reserve have been premature as the fight against inflation continues. The Consumer Price index not only remains above 3%, but it also ticked upwards slightly in February. Even the Personal Consumption Expenditures Index, the Federal Reserve's preferred measurement of inflation, was up over 2.5% from February 2023 (2.8% excluding food and energy). With inflation being so stubborn, and remaining above their long-term goal, it is likely that "higher for longer" will be the case (i.e., a higher interest rate environment will last for longer than people previously thought).  

This excerpt from a recent Federal Open Market Committee (FOMC) report, known as the "Dot Plot", reflects how views on the economy have changed. While some market analysts have anticipated as many as seven rate cuts in 2024, this shows that the FOMC members anticipate that there will likely only be three cuts in 2024, leading to a Fed Funds rate ranging from 4.50% to 4.75%, from the current range of 5.25%-5.50%.

This would also explain the recent bond market performance, since a lack of anticipated rate cuts would lead to investors searching elsewhere for more attractive return prospects.

A "soft landing" is - unofficially - when monetary policymakers both slow the pace of economic growth and reduce inflation without causing a recession. So far, that appears to be the most likely scenario. I think even a mild recession, or a "soft-ish" landing, could be understandable at this point. One factor I have been monitoring has been the unemployment rate, which is beginning to rise slightly despite being at near historic lows.

Unemployment was measured at 3.9% as of February 2024, the most recent reading as of publication. If actions by policymakers cause consumer demand to slow too much, companies may begin to slow production &/or reduce headcount as an attempt to maintain progress toward their financial goals. This could lead to an increase in unemployment, causing consumers to spend less, and continuing the cycle. 


2023 was all about AI-related stock "FOMO" (fear of missing out), resulting in a few stocks with outsized gains & dragging the market along with it. I believe 2024 will be all about the FOMC's focus on managing inflation. If inflation remains stubbornly above the long-term goal of 2%, interest rates will be "higher for longer" and will dominate the conversation all year (up to & possibly during the election).

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]]>Fri, 05 Apr 2024 13:34:38 -0500<![CDATA[All Things A.I.]]>https://www.omnidivitia.com/blogs/post/All-Things-A.I.The first half of 2023 was one with strong market performance, as the S&P 500 returned 16.89%.  However, deeper analysis paints a picture tha ]]>

A.I. related companies seem to be driving this market.

The first half of 2023 was one with strong market performance, as the S&P 500 returned 16.89%.  However, deeper analysis paints a picture that isn't quite as rosy.  The S&P 500 is a market-capitalization weighted index.  When you look at the equal-weighted index, the return is only 5.97%.  The difference is due to the significant influence of some of the largest companies, particularly those related to artificial intelligence.  As of 6/30, seven mega-cap companies accounted for about 26% of the S&P 500 index, had an average return of 93% in 1H23, and a weighted return of 19.77%  This also means that the remaining 493 stocks (with a 74% weighting) actually had a loss of about 3.90%.  There are also some concerns about the sustainability of this market's rally.

Valuations Seem High

As of 6/30, the Wilshire 5000 stock index (intended to represent the entire US stock market), is 1.6 standard deviations above its long term trend.  This is a signal of being overvalued.  Also, even with earnings recovering slightly, markets seem to ignore not only the Fed's current actions, but also the likelihood that they will likely have to continue raising rates because inflation has been so stubborn, and becoming embedded in consumer prices, which has been a stated concern ("...long-term price stability.")

In other words, if the trendline in the previous chart (in red) was translated into a baseline (dotted line in this chart), the current market's deviation is similar to the "dot.com" bubble from 1999-2000, although not quite as large as it was before the Fed started raising interest rates in March 2022.

A Turn in the Business Cycle?


The Conference Board's Leading Economic Indicators have been less than its Coincident Economic Indicators for the last three months.  In other words, based on the chart to the left, not only have survey results indicated more a more pessimistic outlook within 6-12 months from that particular survey date, but for the last three months they also have indicated that the near-future business cycle will be worse than the current situation.  With the first gap being in March 2023, this indicates a potential turn in the business cycle starting in 4Q23 or 1Q24.

Paying a Premium for More Risk?

As of 6/30, the earnings yield on the S&P 500 was about 5.22%.  The yield on the 3-month US Treasury bill was 5.46%.  This means that investors are literally paying 0.24% to take on the risk of the stock market (instead of receiving a benefit of 4.5-5.0%).  At some point, risk management and fundamental valuations will come back into focus, but as long as the market is increasing, many are content to simply ride the wave.  This could lead to some good opportunities when the market corrects, especially if it overshoots the mark trying to correct.


In the short term, "caveat emptor" (let the buyer beware).  To learn more about how our process could benefit your situation, click the button below.

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]]>Tue, 04 Jul 2023 16:07:13 -0500<![CDATA[Fundamentals vs. the Fed]]>https://www.omnidivitia.com/blogs/post/fundamentals-vs-the-fedEarnings may be a sign of where markets are heading.]]>

Earnings May Start to Get More Attention

Our focus has been on the Federal Reserve's tightening cycle for some time, and on COVID stimulus prior to that.  A fundamental aspect of investing has gotten lost in the meantime, but it may start to get more attention in the near future - EARNINGS.  At a base level, when we invest in stocks we become equity owners of that company.  Owners want their companies to make money, both as top line revenue, and more importantly, as bottom-line earnings.  It seems that we have lost sight of how important earnings are, especially regarding fundamental valuations.

S&P 500 Forward Earnings Estimates Have Begun to Turn Over

Fed rate increases take time to work through the economy to have an impact.  The first post-COVID increase occurred in March 2022 at 0.25%.  However, S&P 500 forward earnings per share (EPS) estimates did not peak until June, and began to decline in July. I believe that the decline in estimates still has a way to go.  If that turns out to be the case, and if P/E ratios approach historical norms, it could be a bumpy ride for a while. 


This would be a classic example of one of Bob Farrell's Rules of Investing, as I've quoted in previous posts: "Bear markets have three stages - sharp decline, reflexive rebound, and a drawn out fundamental downtrend.

With an increased focus on fundamentals, higher rates, and considering the Fed is still taking money out of circulation, a continued market pullback is certainly possible in 2023.  However, the Fed also understands the tightrope they are walking: slowing down the economy just enough to tame inflation compared to pushing it into recession.  Asset depreciation may be a casualty of their efforts, but only time will tell.

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]]>Tue, 17 Jan 2023 16:00:00 -0600<![CDATA[Identity Crisis]]>https://www.omnidivitia.com/blogs/post/identity-crisisA recap of 2022 and outlook for 2023]]>

Recovery or Bear Market Rally?

4Q22 provided a substantial bounce in the markets as inflation continued to decline from its June peak.  However, the market's performance in 4Q22 was probably premature in terms of being a sustainable recovery. It appears to be a typical bear market rally.


STYLE4Q222022
 Russell 1000 Index 7.24% (19.13%)
 Russell Midcap Index 9.18%(17.32%) 
 Russell 2000 Index6.23%  (20.44%)
 MSCI EAFE Index 17.40%(14.01%) 
 MSCI Emerging Markets Index 9.20%(22.37%) 
 Bloomberg Aggregate Bond Composite Index 1.87%(13.01%) 
 US 90-day Treasury Bill 1.00% 2.01%
Source: https://www.federalreserve.gov/

The Economy Still Has a Way to Go

Investor optimism seemed to increase in 4Q22 since inflation declined to 7.1% from its June peak of 9.1%. However, even with the improvement in CPI, we must remember that it takes time for rate increases to have a tangible impact on the economy. If we assume a 6-12 month lag for rate increases to have an effect, we are just beginning to see the impact on slowing down demand. Remember how aggressively the Federal Reserve Board of Governors has acted in their attempts to tame inflation.  Not only were Fed Funds rates raised by more than 3.50% in the latter half of 2022 in order to slow demand, but the Fed is also slowing the growth of money in circulation, as you can see in this chart. I would not be surprised to see funds being pulled out of circulation to slow demand further to bring inflation to the stated 2% long term rate, especially given the amount of funds that have been put into the economy over the last several years as support for various reasons. 

    

The challenge is how much to press on these economic brakes while making sure the "car" is still moving forward.

There were three times in 2022 when the markets declined more than 10%. Each time, the subsequent recovery failed to meet it's previous high, and the following lows went even lower. I believe we might be in the fourth leg of this cycle since rates will still likely increase in the first three to six months of 2023.


Another concern is valuations. the year-end P/E ratio for the S&P 500 was roughly 16.7, which is only slightly elevated in "normal" times, but quite elevated given the current level of inflation. However, with a backdrop of higher inflation (i.e., increased risk) than historical norms, buyers should be compensated with lower prices. Given the outlook for interest rates, one could easily make the case that the P/E ratio should be even lower.

Pundits seem to be searching for the identity of this economic environment for 2023.  Throughout much of last year, we began to hear the same refrain that is being echoed now. "The Fed is going to have to pivot (to cutting rates) in order to keep the economy from going into recession. To put it nicely, I think it is (and has been) hogwash to take this position when the Fed has told you explicitly what they are going to do and have not deviated from that path. Consider the following quote from Fed Chairman Jerome Powell's speech at the Jackson Hole retreat in August 2022.

 

‌"Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

In the words of Maya Angelou, "When people show you who they are, believe them the first time." 


*Note:  We gathered this information from sources we believe reliable, but do not guarantee its accuracy.
]]>Tue, 10 Jan 2023 19:42:33 -0600<![CDATA[Thoughts on Valuations]]>https://www.omnidivitia.com/blogs/post/thoughts-on-valuationsIs the market too high or too low? Should I be concerned, or ready to take advantage of opportunities?]]>

Numbers don't lie...but they also don't tell the whole story.

Recently I was reminded of the phrase, "Beauty is in the eye of the beholder."  That could apply to how the equity markets are valued as well.  Many think markets are overvalued; some say we're undervalued.  Which is right?  What do the numbers say?

Start with the Top Line & Bottom Line

Every business has a top line (sales), and a bottom line (earnings).  Two common ratio comparisons are based around these.

  • Price-to-Sales = How much would you pay for every dollar in revenues a business makes?  Let's temporarily remove profitability from the equation. If we took the market value of all publicly-traded US securities ("price"), and we compare it to GDP ("sales"), using the most recently published data, we would get a ratio of about 196%.  Several years ago, Warren Buffett was being interviewed, and discussed this methodology.  He stated that "...if the ratio approaches 200%...you are playing with fire." If we took the market value of all publicly-traded US securities ("price"), and we compare it to GDP ("sales"), using the most recently published data, we would get a ratio of about 196%.  Several years ago, Warren Buffett was being interviewed, and discussed this methodology.  He stated that "...if the ratio approaches 200%...you are playing with fire."
  • Price-to-Earnings = This is perhaps the most common metric investors are familiar with.  For comparison, consider using the Rule of 20 as a rule of thumb (20-inflation=P/E). With inflation at 6.8%, the Rule of 20 P/E would be 13.2.  However, with an earnings-per-share forward estimate of about $220, the current P/E ratio is closer to 21.1.

Both ratios are clearly elevated, but let's put them in context.  The markets are still recovering from an unprecedented crisis that caused a forced economic shutdown.  Companies adjusted by reducing expenses, such as payroll, and in some cases, reducing the amount of corporate real estate owned or leased because so many worked from home.  It makes sense that sales have recovered, and that earnings have done so to a greater extent (because of reduced expenses). Stock prices have not only increased due to these factors, but also due to added government support.  (The CARES Act from March 2020 added $2.3 trillion to the US economy (roughly 11% of GDP)).  But is it too much?

Potential Obstacles

  • The most notable issue today is inflation, which has been caused by both the supply chain delivery issues as well as the previously mentioned government support.  However, what seems to be ignored is the fact that wage growth isn't keeping up with inflation, causing negative real growth year-over-year.  In other words, even if you got a raise, your expenses went up as much and even a little more!
  • Unemployment (from the November 2021 report by the Bureau of Labor Statistics): "The unemployment rate fell...to 4.2% in November.  The number of unemployed persons fell...to 6.9 million.  Both measures are down considerably from their highs at the end of the the February-April 2020 recession.  However, they remain above their levels prior to the coronavirus (COVID-19) pandemic (3.5% and 5.7 million respectively, in February 2020).

Reasons to be Optimistic

It's not all doom and gloom - not by a longshot.  Resolving the supply chain would go a long way not only in helping to contain inflation, but also in allowing companies to keep hiring to fulfill consumer demand that has been surging for a year (which could also lead to greater consumer spending).  Until then, earnings estimates should continue to rise because of the reduced expenses I mentioned earlier.  Also, with the Federal Reserve signaling that they will raise rates and taper their support (i.e., stop putting additional money into the economy by buying bonds) sooner than initially anticipated, bonds will be less attractive since prices move inversely to rates. Risk management will be important, but opportunities may present themselves if there is some short-term volatility.


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]]>Wed, 15 Dec 2021 16:04:42 -0600