January 27, 2022
By Scott Wohlers
Stock market bottoms take many forms. For a variety of reasons, the Bull and his partners believe that this one will take time and go through more bouts of volatility. (Remember, volatility cuts both ways.) Investors have more than the usual number of big concerns to deal with today. There is inflation and the Federal Reserve’s response, the pandemic and its course, Ukraine and a possible Russian attack, supply chain concerns, and more. Quite a list!
It will take time for the market to work through these various risks and make the appropriate discounts. In the meantime, risk appetite is likely to be muted. On the plus side, economic growth is excellent, the consumer is strong, supply chains are gradually improving, and the pandemic is sending signals that it has already peaked.
The best antidote to all the many concerns is information. Earnings and their prospects in the new year are especially important. So far, they are very good. Expectations, in some cases, may have run too far ahead of reality, but results are mostly pleasing. The new year promises more growth. Fundamentals will inevitably overcome fear; it may just take time. Stay steady, my friends.
El Toro Solo
