The latest news, articles and insights from Financial Poise.
Thursday, July 7, 2022
Fed Signals Additional Aggressive Interest Rate Hikes, Markets Go Up
Traditional economic theory tells us that all else being equal, stock prices go down when interest rates rise. But we live in real life, not in a text book. Case in point: when the Federal Reserve released the notes from its June meeting yesterday, making clear that another substantial interest rate increase will likely be made at its July meeting, most indices moved higher. Why? If you are a regular reader of this newsletter, you already know. If you missed it, check out our June 16th edition here.
Social media can be a valuable tool for almost any business, regardless of its industry or size. Maybe your business is an exception, but are you sure? And if you do utilize social media, are you doing so efficiently? If you think you are, are you sure? Are you even sure what the word “efficiently” means in this context? Make sure by reading Tina Powell’s Are You Using the Full Potential of Social Media Marketing for Your Business?
We hope you listened to the repeated clear and unequivocal warnings we started giving our readers more than a year ago. If not, you know the idiom: there’s no time like the present. Read Investing in a High-Inflation Environment and think about what changes you may want to make to your investment portfolio.
Jim Cramer is not dumb but you are if you blindly follow his recommendations
We’re picking on Cramer not because he is uniquely bad at stock picking. He has a lot of company. It’s just deliciously ironic that someone famous for being so good at it is, at best, less than mediocre. This is not news. Bloomberg Intelligence, for example, published a piece back in February that began, “[o]ne ETF that doesn’t exist but may be in the works is an inverse Jim Cramer ETF, which would hold positions opposite to those promoted by the CNBC host.” The internet is replete with articles that dissect Cramer’s track record, with most we’ve seen giving him a lukewarm review at best: Henry Blodget discussed it back in 2007, Murray Coleman discussed it more recently in his November 2022, and there are many others. One bottom line, his long term track record (depending, of course, on what measuring periods one uses) is often not as good as the market. But here’s the thing: beating the market is hard and most stock pickers do not do it over the long term. If you do not understand this then you need to read Investing Basics For Beginners Installment #1: What is Stock? And Should You Buy Some?
Asset Allocation Has its Limits
Financial Poise regularly stresses that diversification among stocks is not enough to maximize protection of your investment portfolio. It is necessary, but not sufficient. The other thing you need to do to achieve maximum protection is allocate some of your investment dollars to asset classes other than stocks (such assets are commonly referred to as ‘alternative assets’). Read Alternative Asset Investments May Help When Stocks Decline and/or Meet Bob, Michele, David, and Isabella to understand why and how. Despite this, it is imperative to understand that broad stock market downturns can impact other asset classes. The Wall Street Journal’s July 4th article, Venture Capital Feels the Stock Market’s Pain, hits the point home.
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