In the past two weeks the market decidedly took a sharp turn for the worse. The world seems to be falling apart with out-of-control inflation, the war in Ukraine, UK enacting suspect fiscal policies, Europe in the midst of energy crisis and contentious midterm elections at home.
This table shows rates on select cash alternatives as of 8/29/2022. Traditional banks are still paying nothing, which is unlikely to change anytime soon. FDIC-insured cash deposits at most brokerage firms aren’t particularly appealing either with 0.25% at Schwab. With a little extra work, moving your money to a High Yield Online Savings account, such as Ally or Marcus, might be a good option for many savers.
This time of the year I like to look through some of my performance spreadsheets to see how things are going in various investment areas.
In this post I look at how bond prices have reacted to recent Fed policy changes
Fed’s toolkit in fighting inflation – what can they do, what have they done so far, what are they likely to do in the near future.
In a major change of leadership, energy, real estate and financials had a phenomenal year. On the bottom of the table we have gold miners (gold price dropped in a high inflation year), biotech and internet which slowed down after years of torrid growth.
Reviewing major stories of 2021 and how they affected the major asset class performance
Strong recent returns ARE a combination of earnings growth (expected to remain robust in the next few quarters as shown in Exhibit 2) and investors’ willingness to pay more for each dollar of those earnings (likely helped by Fed policies and lack of attractive alternatives).
S&P 500 index is up 19% so far this year, here I dig into the data on what’s driving it and what’s going on under the surface of the index.
S&P 500 has been steadily trending up all year and hasn’t been too far from all-time highs.