Stocks and Election Thoughts and Elon Musk

• Since I last blogged, the stock market went into a bear market. It remains stuck! Every rally attempt has been beaten down by the bears, chief among them Federal Reserve Chairman Jay Powell. He’s been on a relentless interest rate hike to tame the beast of inflation.
• “Too much money chasing too few goods.” All the covid stimulus, including the stimulus checks, eviction moratoriums, halting student debt repayments, rates near 0%, and government deficit spending and various bills (infrastructure, “inflation reduction act”), juiced spending and inflated asset prices. Meanwhile, the pandemic itself has led to economic shutdowns and supply chain shortages around the globe. And did I mention a war in Europe? Russia invading Ukraine and the subsequent sanctions has driven up the costs of oil and natural gas, while putting pressure on things like fertilizer, wheat, and other things.
• As rates go up, stock market valuations have come down. In addition, corporate earnings reports have been lackluster and future guidance has been poor. We are also seeing companies announce hiring freezes and layoffs. This could accelerate going forward.
• California’s tax revenues are coming in light! To be expected, as California receives a lot of tax revenue from a small number of people and companies, and if earnings are down and capital gains are non-existent, tax revenues will fall short.  So much for the budget surplus of yesteryear!

My thoughts on it all: I’m 100% invested and have ridden the bear market down. I continue to add to positions and reallocate to stocks and sectors that I think will do well going forward. I’m not chasing the hot stocks and sectors that have outperformed during the bear market. I’m more interested in tech and growth that will outperform once the bear market ends and the new bull market unfolds. Patience… Patience… Patience…