The State of Play

Earnings are terrific. Interest rates are mostly stable. Money supply has been growing at approximately 5.5 percent over the past year. This is stimulating. Therefore, a reasonable conclusion is that the U.S. stock market is in good shape. Further gains should be expected. Of course, unforeseeable events can always throw off any projection. However, that is why we use the discipline of diversification and only allocate an appropriate percentage of anyone’s assets to stocks. (What is appropriate depends on your circumstances, needs, and preferences.)

Inflation is still sticky. The Federal Reserve may need to modestly raise rates. If so, then investors may take that as a sign that they are serious about bringing inflation back down to their 2 percent target. In that case, longer-term interest rates may decline modestly. This would reinforce investor confidence in both bonds and stocks.

Artificial Intelligence and its roll-out and adoption are still a major driving force in our economy. Remember, much of the rest of the world has yet to embrace its possibilities. Just like smartphones and the internet, AI will become ubiquitous. There is a long way to go. Obviously, no trend is a straight line. There will be fits and starts, doubts and naysayers. Understand this and stay steady my friends.

-The Lonely Bull