Market Is Recovering, Now You Can Start Trimming Gains
In my last post on July 12th, I mentioned the Stock Market and Tech stocks will pull back, and it did, however, I also said it was No Time to Panic.
The reason for the No Time to Panic comment had to do with what is going on right now, the market and Tech stocks are recovering close to where they were a few weeks ago.
The market had a mini crash a couple weeks ago on Monday, August 5th, and at that time stocks like Nvidia, NVDA, dropped down to $90 after hitting $134 twice in the past 60 days. Nvidia is climbing closer to $134 leading up to their earnings announcement on August 28th. Right before it reports earnings, may be a good time to sell all or some of your position, rather than watch it drop back to $100 in the near future.
Now NVDA may go higher, then again, it just showed you it can go to $90. This is why I said No Time to Panic, declines can happen, you get to see where stocks can drop in the down times, and can educate you when the stock recovers closer to its all-time high, you may want to trim the position or sell it all together before it drops again.
If you felt uneasy about your portfolio during the recent declines, now you have an opportunity to proactively trim or sell positions, and get your portfolio risk back in a comfortable balance.
We recently saw similar action with Facebook/Meta, up to $524 after their last earnings announcement, recently dropped to $442, and now it has risen over $540 for a second time. In my opinion, now is a good time to sell a portion of the position, even though the momentum is in their favor.
We know the Storm Clouds are coming in for our Economy and Corporate Profits. Forward guidance is being lowered, Meta and other Tech stocks may have a little more upside, however, they could also have tremendous downside from current levels.
Recent data continues to show strength and weakness with jobs and our economy, depending on which data you are analyzing. Today retail numbers show consumers are still spending strong, however, credit card companies are also reporting consumer debt balances are near all-time highs, and late payments are on the rise. Therefore, strong consumer spending can actually be more concerning, than be satisfying.
Companies are starting to report reductions in their employment numbers, as they start reducing staff for the expected slowdown in demand. NONE of this data is overwhelmingly negative, but as I said in my last post, the Storm Clouds are moving in.
We know that means are economy will slow, now all of us financial professionals can debate whether we will have a Hard Landing or Soft Landing, but either way, the growth this market has seen for over a year now, will not continue at this pace.
Stocks are getting close to being priced for perfection once again.
Something has to give during economic cycles, similar to were we are headed now. It will not end with the economy slowing down, consumer spending slowing down, job cuts increasing, and the Stock Market increasing while all of that is happening.
We have been and will continue to be in a Market of Stocks, and not a Stock Market. Owning the right stocks will be important, and not owning the broad spectrum of stocks, such as Index Funds.
With Money Market Funds currently yielding 5%+ on an annual basis, which will go down as the Fed Lowers the Federal Funds Rate, now is a good time to lower your market exposure, especially if you only need a 5%-6% annual return from your investments to get into or through Retirement.
If you are looking for professional management or a second opinion on your investment allocation, please contact us, J.Wigen@IFManagers.com.
Best of luck to all of you!
James CAM® ChFM® CPM® CWM® designations are issued through Global Academy of Finance and Management or GAFM®.
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All opinions expressed by James R. Wigen on this website are solely his opinions and do not reflect the opinions of IFP Advisors, LLC, dba Independent Financial Partners, (IFP). Investment Advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Adviser. IFP and Independent Financial Management, LLC (IFM), are separate entities.
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