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Monthly Archives

September 2022

Is Risk Avoidance Even Possible In This Environment? No, But Smart Risk Selection Options Exist.

After the depleting drop off of the last few weeks, this morning we've enjoyed a little bit of a rally in the markets. Of course, the famous question is, is this really just a dead cat bounce? Well, markets price in the future, so have they done pricing it in? Really, nobody knows. So let's switch the conversation from returns to risk. Today's world is very much one of risk selection rather than risk avoidance. What do I mean by that? Well, let's explain by differentiating the different asset classes that are out there and discuss the risk associated with each and every one of them. Your typical risk-free asset is cash. When we talk about putting cash under the mattress, we're thinking, "Okay, that's safe." Of course, if you took $100 in 1920, threw it under a mattress, today, I don't know what it's worth, 10, 20 bucks? It…
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Today’s Inflation Update: A Great Opportunity to Rebalance

  What a great day to rebalance. The market's down. It's 1:00 PM. It's down 3% for the S&P 500. Why did the market react as it did? So consumer price point numbers came out for August, and prices were up 8.3% year over year. It's actually a slight deceleration from the month previously due to a 10% drop in gas prices. However, what the market really cares about is core inflation. And core inflation came in at 6.32% versus about 6.1 for estimates, and I think it was 5.8% the month before. So core inflation is still gaining steam. That means it's pretty much guaranteed that at the next Federal Open Market Committee, there's going to be another 75 basis point rate hike. When there's a 75 basis point rate hike, interest rates go up across the board. Treasuries are already going up in anticipation, and when yields go…
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