Stocks March To Their Own Drum
Headed into this year, a generic narrative about bullish equity sentiment went something like this.
Economic deceleration in the US and signs of moderating inflation across advanced economies would give developed market central banks the plausible deniability they needed to de-escalate rate-hiking campaigns on the way to a semi-coordinated "pause." The disinflation process would broadly persist, even if it was accompanied by intermittent "scares." And, as evidence of waning growth momentum moun
In my possibly deranged mind, we are approaching the gates of heaven right now in fixed income. The rise in rates has caused the prices of seasoned fixed income to decline, for me 10-12%. Almost anything can now be bought at a discount and the rates are now up in the 4.5-5.0% range for a large tranche of IG debt and preferred stocks. Buying now pays decent rates and offers the prospect of nice gains of 20-25%, either from a pivot or from payment at maturity or on call. Buying the right stuff for punter like me virtually guarantees decent safe returns, 5-6% current cash (better if tax-exempt) plus 20-25% long run gains. All this without having to guess about the stock market. I’m 78 and done guessing for now.
I respect your perspective on this and and really listen to what you have to say. I am trying to figure out what to do for a 30 year horizon. Do you think your approach would be appropriate for me?
Actually, this is what makes equity markets “dumber” than bond markets
By contrast, stock prices at any given time reflect a discordant collage of factors, ranging from the fundamentals to psychological phenomena associated with greed and despair.
Who says greed and despair are always dumb?