Market Update
Market Edge

Market Update for the Week of March 11th, 2024

On Friday the February jobs report was released by the U.S. Labor Department. The news was a bit contradictory. 275,000 jobs were added in February compared with the estimate of 198,000 that economists had projected. As a reader of this column, you know we talk about ‘good news/bad news’. Good news being bad for the market – in this case more people were hired last month. Bad news being that because of this good news the implication is that economy is still going great, but it may hinder the Federal Reserve’s plans to reduce interest rates soon. HOWEVER, the unemployment rate rose to 3.9% and wage growth (raises) was lighter than was expected meaning that perhaps inflation has calmed down enough to allow the Federal Reserve to lower rates! Crazy huh? Added to the equation was the data on January jobs growth which was revised showing that growth was actually lower than previously reported.

What this translates to is that Friday’s jobs data illustrates that the Federal Reserve is achieving an amazing (so far) accomplishment where employment is high, and inflation is being kept tame to a degree.

S&P 500 (stockcharts.com)

Friday’s close saw the S&P 500 at 5,123, down for the week by 0.26%

Dow Jones Industrial Average (stockcharts.com)

The Dow ended trading Friday at 38,722, down nearly 1% for the week at -0.93%

NASDAQ (stockcharts.com)

The Nasdaq took a breather this week, down 1.17% closing at 16,085 Friday.

Russell 2000 (stockcharts.com)

The Russell 2000 continues to show resiliency during a pause in the big board’s advances this week. Closing at 2,082 it posted a 0.30% increase for the week. Although a modest gain, this is a good omen for the rest of the market.

As you can see, we use the Rydex Russell 2000 for our weekly chart due to issues between Stock Charts and the reporting agency.

2-Year Treasury (stockcharts.com)

The 2-year Treasury came in a bit lower than the previous week at 4.47%. The 5-year at 4.05% and the 10-year at 4.07%

Volatility Index (stockcharts.com)

Due to the week’s mild downturn, the VIX closed at 14.74, a bit above last week’s reading of 1.11. This number shows little if any investor market concerns. A reading of 20 or above would be an indication of growing concern. 30 and above fear and 40 and above panic. We’re nowhere near those indicators presently.

30-Year Mortgage (stockcharts.com)

This weeks national 30-year fixed mortgage rate ended at 6.88% down fractionally from last weeks 6.94%

West Texas Intermediate Crude Oil (stockcharts.com)

West Texas Intermediate Crude ended the week at $78.01/ barrel, a bit lower than our expectations from last week’s post. The forecast for the coming week is to see prices between $75.50 - $78.00 per barrel.

The Flag covering the New York Stock Exchange three day after the 2020 election –

Friday, November 6th, 2020

Commentary

Over these past few weeks I have been hoping for some sort of profit taking. Although the markets were down fractionally this week, this is NOT a sign of profit taking. Investors taking a bit of the money that’ve made these last months would be a welcome breather. It has yet to happen unfortunately. As I always say: ‘As things cannot always come down, they cannot always go up either.’

The markets are beginning to show warning signs that they are overbought. The S&P 500 has performed amazingly since the beginning of 2023, up nearly 35%. My concern is that those investors who sat by waiting for the market to go down or proof that the markets would continue northward are now jumping in. This enthusiasm is not always a good sign. Perhaps it will be wise in the coming weeks to become a bit more of a Contrarian about whom I wrote about last week.

Looking to Election Day 2024

Wall Street as well as those investing there, is beginning to gaze, somewhat apprehensively, on Tuesday, November 5th. Now that the Primary races are mostly behind us, it has become obvious, if not in fact, that Donald Trump will be challenging Joseph Biden once again this fall. Trump who by election day will be 78 and Biden, 82 a few weeks after the election are, at this point in time, about equally matched in most polls. This will change should Trump be convicted in any court, state or federal. The state trial is scheduled to begin March 25th and expected to last 6 weeks. In his State of the Union Address on Thursday, Biden proposed raising the corporate tax rate, while Trump, who signed a law in 2017 slashing taxes on wealthy Americans as well as companies will be expected to continue that same policy. It is uncertain how asset prices could be affected by either of these policies. There will likely be other proposals put forth prior to the election from both parties which could have an effect on the markets.

The consensus from exit polls among many Republicans is that should Trump be found guilty of a felony, their stance on voting for him will change. With a majority of Nicki Haley’s voters already signaling no desire to vote for Trump, the likelihood of his re-election is in doubt, but most especially if he is found guilty in any of the four upcoming trials. Of those four court appearances, the only one trial that is certain to be held prior to the election is the ‘hush-money’ trial on March 25th. One should never consider Donald Trump out, however. If nothing else, he has proven time and again that even a human being can have nine lives.

Given the distinct possibility of a divided congress, it is not clear how much will be accomplished on this upcoming 118th Congress, much like the 117th has been. Party lines will determine if anything changes on the tax status including Biden’s proposal for increasing the corporate minimum tax on companies reporting in excess of $1 billion in profit from the current 15% rate to 21%. Fiscal policy will likely be high on the agenda regardless of who wins in November. Should the Republicans sweep the elections expect the 2017 tax cuts to be extended however the cost for this will likely be higher inflation. A Democratic sweep would see higher taxes on the higher-income households as well as those corporate tax increases, I wrote about a moment ago

As we’ve seen these last many months, Artificial Intelligence has propelled the markets and there has also been a simmering expectation of rate reductions by the Fed. A 7.4% year-to-date return on the S&P 500 is verification that the economy is, for now, headed in the right direction, even if Biden is being given scant credit for it being so. Nearly 70% of stocks are trading above their 200 Moving Day Average, a healthy sign for a continued advance. Market Breadth is also showing positive indicators as most stocks are participating in the current advance.

On Thursday, Jerome Powell, the Federal Reserve Chairman, gave an upbeat report to the Senate Banking Committee saying, “The economy is growing at a healthy, sustainable, solid, strong pace….We’re in a healthy place.”

The Consumer Price Index (CPI) for February will be released Tuesday which will give further clarity in the Fed’s decision to lower rates mid-year. The market will react one. I promise.

Other than the usual noise, there were thankfully no major flare-ups internationally.

On Investing

Passive investing is suitable for the person who has no interest whatsoever in how to invest, where to invest, how much to invest. For that investor a ‘Buy and Hold’ strategy is usually the way to go. Unfortunately, there are too many investors who are forced to go it alone because either their financial advisor doesn’t speak to them regularly or at all. According to data provided by CNBC, 99% of investors do not have a financial advisor. While I personally think that figure is a bit hyperbolic, it is safe to say that most investors have no-one to turn to when making an investment decision. For those with a 401k, or 403b not having anyone to guide them probably falls around 99.9%. Added to this is the high turnover of advisors due to their difficulty in acquiring new clients as well as client assets. Over the years the majority of those who became clients were due to the fact of rarely, if ever hearing from their broker. My book “Managed Money: An Avenue to Wealth” talks about this in greater detail, giving a candid look at how brokers categorize who of their clients they pay attention to.

We’ll continue to monitor the markets through our analysis by following the indexes, indicators, signals, methods and trends which can help you formulate the best strategy in which to achieve your financial objectives.

Have a blessed and prosperous 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 38,722. The S&P 500 at 5,123.

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 nineteen 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 – where the S&P 500 has increased 21% + 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 followingEntered
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
A portfolio consisting primarily of Energy stocks2/27/24

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 or opportunity.

* 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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