Market Update
Market Edge

Market Update for the Week of February 12th, 2024

Our Commitment

When GaneWisdom/Market Edge went live in August 2022, the goal was to provide our subscribers top-tier market analysis and outlook to those with qualified accounts such as: IRAs, ROTH IRAs, 401Ks, and 403Bs. Our desire was to make this service affordable to anyone. Instead of paying thousands of dollars, or a percentage based on investment assets (which is how Guy managed his client’s money as a Registered Investment Advisor) GaneWisdom/Market Edge charges a very affordable $200 per year. Our subscribers now include those with non-qualified accounts as well as financial professionals.

We are making this week’s update for free

The S&P 500 closed above 5,000 for the first time since its inception in 1957, hitting 5,026 by the close of trading on Friday. The Nasdaq likewise hit above 16,000 before retreating slightly ending at 15,990. AI has been powering the moves in the Nasdaq as investors are betting that artificial intelligence technology will continue to expand. The S&P 500 has gained 22% since the correction low last October.

The Philadelphia semiconductor index also advanced, up 1.99%. Tech-heavy companies like Microsoft, Alphabet Amazon and Nvidia all contributed to the index gains. About two-thirds of those companies listed on the S&P 500 have now reported their earnings results. The expected growth for the fourth quarter from these companies had been projected to earn 4.7%, instead 81% of these companies had earnings growth of 9.0%.

This past week saw all three indexes register their fifth straight weekly gain, however that nice round number in the S&P 500, although anticipated for weeks, should soon provide a clue to the near-term markets, either increasing or decreasing.

S&P 500 (stockcharts.com)

The S&P 500 recorded it’s amazing high this week, crossing over the 5,000 mark to end trading Friday at 5,026, up 1.37% for the week.

Dow Jones Industrial Average (stockscharts.com)

Friday’s close saw the Dow at 38,671 up 0.04% for the week.

Nasdaq (stockcharts.com)

The Nasdaq closed out the week up 2.31% ending trading Friday at 15,990

Russell 2000 (stokcharts.com)

The Russell 2000 ended on an upbeat note Friday at 2,009, up for the week 2.41%. For weeks, the Small Cap market has been underperforming. In fact, prior to this weeks results the Russell 2000 was up just one week since the beginning of January. This week’s number could mean that a Small Cap rally is in the offing. As we’ve written many times here – Small Caps are the Canary-in-the-coalmine when it comes to the performance of the larger caps. We use the Rydex Russell 2000 chart due to issues between Stockcharts and the reporting agency.

2 - Year Treasury (stockcharts.com)

Friday saw the 2-year Treasury Bond at 4.48%. The 5-Year at 4.14% and the 10-year at 4.18%

Volatility Index (stockcharts.com)

Friday’s VIX number ended at 12.93. That it is far below the number 20, we see little investor concern of a downward trend anytime soon.

30 – Year Mortgage (stockcharts.com)

The 30-year Mortgage national average ended Friday at 6.64%

West Texas Intermediate Crude Oil (stockcharts.com)

Oil in the West Texas Intermediate Crude sector ended Friday at $76.84. This week could see WTIC hover between $76.00 - $81.00 per barrel.

Commentary

A new report by the Philadelphia Federal Reserve states that inflation is returning to its pre Covid numbers and is calling for a ‘soft-landing’ in the economy. Recession fears have eased considerably as well, with Economists believing that a recession now has a 17% chance of occurring. I am still concerned about these high Treasury Bond yields, however. The Inverted Yield Curve I’ve spoken about frequently is still in place. As you remember an Inverted Yield Curve occurs when short-term Treasury interest rates are higher than the long-term rates. As noted in the chart above, the 2-year Treasury is now at 4.48% while the 10-year Treasury stands at 4.18%. Although I personally am hopeful, I still remain less than 100% convinced a recession will not happen. I am also concerned about the debt load consumers are holding. As of the end of December there is $17 trillion in debt by Americans with credit card balances of $1.13 trillion. Mortgages account for another $12.25 trillion. Auto loans balances stand at $1.61 trillion. As a country, the U.S. is in debt to the tune of more than $34 trillion. For real-time figures as they happen, go to: usdebtclock.org. Its eye-opening. Auto loans and credit card delinquencies are at all-time highs. This happens when the payments are over 90 days overdue. Again, these numbers and the Inverted Yield Curve has me concerned.

You’ll notice that the S&P 500 has doubled since 2017 when it stood at 2,500. When I hosted seminars as an active Registered Investment Advisor, I would remind those in attendance that “Its not what you make, its what you keep that counts”. Somehow the gurus and too-many financial professionals neglect to remind their clients of that. One only has to go back a few months ago when the market began the current run-up. Many investors had to give up potential profits due to their having to make up previous losses. I have an excerpt from my post-dated January 1st, 2024, below.

S&P 500 1970 – 2/9/24 (LSEG Datastream)

For those of you who follow these Market Updates but are not yet subscribers, it is important to know that when we issue Mid-Week Market Alerts it is with the suggestions to transfer money out of either a position(s) or to transfer into them. These alerts are time-sensitive meaning that an index, security or commodity could look attractive one day, perhaps before a run-up but then the next day no longer

be advisable to purchase due to that price increase, thereby negating (or eliminating) a positive return. In plain English – It may have gone up and any profit may not be significant or perhaps even realized.

Chances are good that if you are of the ‘Buy and Hold’ persuasion that your portfolio is now in the black. That is great news. The conundrum going forward however is to avoid big losses and that is where a subscription to GaneWisdom/Market Edge could be of (immense) value. For confirmation of this statement, I encourage you to review our previous posts which go back to our inception on August 21st, 2022.

By using the phrase “It seems……..” a person could assume (Keeping in mind what assuming accomplishes) that the situation has somewhat become inert, therefore I will not write “it seems that events both nationally and internationally are now becoming manageable for the time being.” This of course is anything but accurate. The presidential election is becoming more contentious by the week, the Middle Eats is becoming increasingly volatile and events in southeast Asia are becoming increasingly unstable. It is now more important than ever to stay informed and current with regards to your investments be they your 401k, 403b, IRA, ROTH IRA or non-qualified portfolio.

Have a blessed week………….

Guy W. Gane, Jr.

From Market Update for January 1st, 2024

As you know, our investment philosophy follows the guidelines used by Guy Gane when he managed many millions of dollars for many thousands of clients. His results placed him among the premier Registered Investment Advisors in the United States for many years.

Periodically we are asked “How are subscribers to GaneWisdom/Market Edge able to enjoy profits without losing money?” The answer is – they don’t! No-one can accurately know when a market top happens, nor when a market bottom will occur. Our philosophy is to take small losses in order to avoid big losses.

Let’s analyze the stock market for the last two years – 2022 and 2023.

2023 has witnessed an extraordinary runup in the S&P 500 (+24%), the Dow Jones (+13%), the Russell 2000 (+17%) and the most impressive – the Nasdaq (+43%).

If you are participating in your company’s 401k or 403b, you most likely have no one giving you guidance as to what to buy, when to transfer or when to sell. Consequently, you probably just leave the money, and continue to deposit into whatever funds you originally started with. Most Financial professionals advise their clients to ‘Buy and Hold’ their investments because ‘the market always comes back, then goes up!’ Sounds logical as well as sounds good! It’s hard to argue that logic, especially this year when the market did indeed ‘Come back’. But is that the end of the story? Not by a country mile……

Had your portfolio been invested in tech stocks, the Nasdaq let’s say, and you just kept the money there because your advisor said that’s the ‘smart move’, 2022 saw your investment lose 33% of its

value (the Nasdaq’s performance in 2022). Your $10,000 investment by December 2022 was now worth $6,700.00. But the market came back – up 43% as we’ve seen. Despite this – YOU STILL LOST MONEY!

Why? Let’s look……

$6,700 x 43% = $2,881

$6,700 + $2,881 = $9,581 !

In order to break even – JUST TO BREAK EVEN – the Nasdaq would have had to increase 49.3% !! You still lost money 2023!

As you can read in our Archive section, we have given sound financial guidance throughout the last 16 months which could have minimized these losses and maximized gains.

This dear reader, is the visual result of Buying and Holding.

Upon Reflection

When we began publishing GaneWisdom/Market Watch on August 21st, 2022, the Dow on the previous business day (8/19/22) stood at 33,706. The S&P 500 ended trading on the same day at 4,228. As we wrote above, Friday’s close for the Dow Jones was 38,671. The S&P 500 at 5,026.

Having to give back profits, then having to make them back up instead of profiting by building on profits is not the way to win on Wall Street. This is the ‘Buy and Hold’ strategy. Realistically this is the ‘Buy and Hope’ theory.

Our subscribers have averaged meaningful positive returns and by following our column exited the markets and re-entered them when appropriate – while the Buy and Hold crowd hung on with white knuckles hoping the market would come back and make up what they lost. The current market has offered significant trading opportunities which we’ve taken advantage of throughout the past eighteen months (please refer to the “Archive” Section of our site). We are listing our current positions below. Our market strategy has been taking advantage of upward trends, the advantage being not having to make up for the large losses that can (often) occur in the Buy and Hold strategy. When (not if) the market shifts again, we will issue our analysis, guidance and suggestions at that time.

Our Commitment

When GaneWisdom/Market Edge went live in August 2022, the goal was to provide our subscribers top-tier market analysis and outlook to those with qualified accounts such as: IRAs, ROTH IRAs, 401Ks, and 403Bs. Our desire was to make this service affordable to anyone. Instead of paying thousands of dollars, or a percentage based on investment assets (which is how Guy managed his client’s money as a Registered Investment Advisor) GaneWisdom/Market Edge charges a very affordable $200 per year. Our subscribers now include those with non-qualified accounts as well as financial professionals.

Our market analysis consists of market indicators, trends and strategies which allow our followers to avoid large losses usually associated with the traditional ‘Buy and Hold’ method. Our results speak for themselves and each of our Posts since our inauguration are available under the site’s heading: ‘Archive’.

In Conclusion

As a subscriber to GaneWisdom/Market Edge you are being given unequalled access to the latest and most comprehensive market analysis available. Please note the following and move accordingly. We strongly caution moving into an equity position in the middle of a market rally, as we are in right now. This could lead to severe losses – ‘Buying high, selling low’ – is not wise. This is especially true for this current rally (as of this writing) where the S&P 500 has increased 18% + since late October. Please watch for our Mid-Week Market Alerts in the event of shifting market conditions.

Wishing, hoping, If only’s and what if’s are based on emotion and you know that we follow the numbers, the indexes, the trend, the fundamentals - not emotions.

Our current positions:

We currently are/or were positioned in the following:Entered
A portfolio consisting primarily of Consumer Products11/6/23
A portfolio consisting primarily of NASDAQ – dominated stocks11/9/23
A portfolio consisting primarily of S&P 500 (Large Cap) stocks11/9/23
A portfolio consisting primarily of Financial stocks11/9/23
A portfolio consisting primarily of Telecom stocks11/9/23
A portfolio consisting primarily of Small Cap stocks11/14/23
A portfolio consisting primarily of Biotech stocks11/16/23
A portfolio consisting primarily of Health care stocks11/16/23
A portfolio consisting primarily of Technology stocks1/22/24
A portfolio consisting primarily of Electronic stocks1/23/24
A portfolio consisting primarily of Banking stocks2/2/24
A portfolio consisting primarily of Retailing stocks2/2/24

Your particular Mutual Funds and/or Variable Annuities may or may not offer all or any of the positions we recommend from time to time. You MUST do your homework. Doing so and finding the portfolio in accordance with the our analysis may position you to take advantage of what we believe to be the next market rally.

* As is the case with any investment, use your discretion and judgement before purchasing and/or transferring. Diversification is always prudent; therefore, our suggestion is using a portion of your portfolio and not the total in any one fund or subaccount. A portion should remain in Cash (Money Markets)

Please watch for our Mid-week Market Alerts should there be any

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