What can we do to fight Inflation

The T*pster 2018

Staying calm during uncertain times

Soaring gas prices, grocery bills doubling, stocks in a seamless never ending downfall and interest rates reaching levels not seen in decades are surely disturbing if not to say devastating to most people.

Most older American are both confused and perplexed by the financial demise of their bank accounts and retirement portfolios.

Some signs have been encouraging over the last couple of months; but, to think global and domestic economic problems will recover quickly is not practical nor helpful in any way. Optimism about the near future is not what this article is all about. However, we definitely need to change how we think about this crisis and what we do about it.

I promise to quote some important financial minds and economic experts concerning the immediate future.

The midterm elections

Most older Americans would tell you that the results of the midterm elections were surprising, at the very least. Largely driven by the voice of younger voters, it could just be a look at the future of voting in this country.

Many older voters found themselves faced with new laws within their individual states that dictated how, where and when they could vote. This definitely had an effect.

Older voters have always been a driving force in our country’s elections. These voters are typically more informed and decisive.  For future reference one should go to their state’s governors website to get updated information about new voting laws established in their state.

The deadline to vote in most states is mid October but not all. I know in New Jersey to vote for November 8th elections you have until October 18th to register.

The importance of staying the course

The stock market has never been a short term fix for over 99% of all investors through the years. Unfortunately, for most, right now the ride seems way to turbulent and a desire to get liquid overtakes traditional wisdom.

However, it is critically important right here, right now to stay the course. Don’t even think of the short term as scary as that is, but focus on the long term. Remember that despite the setbacks, stocks have more than tripled over the last ten years.

Recovery and what to do next

The fact is, over the first six months in 2021 the market dropped nearly 25% and this was the first time we were in “Bear-Market” territory in over a decade. Still down nearly 20% as the year ends if you are in retirement or almost there the pain and loss can be overwhelming.

So, what are we to do?

Re-evaluate your stock and retirement portfolios. Think only of the long term and diversify your holdings to balance your risk and reward levels.

Why a weak January 2023 may be a good thing

The Dow Jones Industrial Average has ended January down 15 times since 1998. If the trend holds once again, investors are in store for a dismal start to 2023 and after a brutal 2022 and gut wrenching December.

But not all hope is lost. According to Matthew Carr, Chief Trends Stategist of The Oxford Club, over the last 25 years, January has been one of the worst months for stocks. In fact the only month more dismal for equities during that same time frame is September (notorious for its swoons). He does admit that things were much different in the 1990s, but times change.

Is There a Reason to Rally?

Few trends, are absolute. The Dow has posted some strong performances in January during the past quarter century….. like 2012, 2013, 2018 and 2019.

Remember, December tends to be one of the best months for equities. Steep sell-offs during the month, much like we just witnessed are rare. But when they happen, it often leads to uncharacteristic rallies in January.

This pattern isn’t universal, of course. Half of all December sell-offs we’ve seen in the past 25 years did continue through January. That includes January 2003 and January 2009 smack-dab at the end of two of the last three “Bear Markets”.

From a broad market perspective, the outlook for January 2023 is probably not the fresh start investors were hoping for. Technicals, are also pointing to more pain ahead.

The upshot is that a steep sell-off continues in January which pushes those October 13th, 2022 lows – will trigger a rally.

Don’t try to time the Market

Though people think they can somehow pick the best time to buy and sell stocks, I’ve seen far more guess wrong than right. Even the so-called experts get it wrong enough times to make it necessary to control your behavior.

Why take unnecessary risks. Don’t reach for unsafe interest and dividend yields. Companies that pay high yields and dividends are always more risky. Both high paying dividends from General Electric and General Motors cost investors dearly in 2019 and 2009 respectively. High yield bonds are referred to as “Junk Bonds” for a good reason!

However, the T*pster says, now more than ever before, balance your portfolios. This can be done by balancing your stock holdings with safe bonds and other fixed-income investments such as various out performing annuities.

Do take a chance on some stocks, but make sure you have multiple endorsements from professional money managers.

Seven out of ten economists surveyed by Bloomberg are forecasting a recession this year. But it’s good to remember that the market is always forward-looking.

I believe that the market has already priced in a recession and now its sight are set upon a recovery. Will that take place in January? Or, will the bottom be pushed even further during the first half of 2023.

In Conclusion

I have presented key questions and even more optimistic answers that you, as individual investors, need to find out for yourselves in the new year.

It just might be the appropriate time to join an investment club if you haven’t already. I belong to The Oxford Club and for the first time ever, Alexander Green, Chief Investment Strategist, is set to reveal his #1 investment for 2023.

Finally, do not keep all your money in cash; but do keep enough to sleep peacefully at night.

Markets will recover and capitalism will more than survive.