Fun with politics and expectations
It's not really about whether rate hikes will affect the economy or the stock market/valuations. It's not really about whether or not we'll have a taper tantrum. It's about the expectations and risks and worries of these things. Maybe in the 2-5 year range its about the reality of them, but this chart really ends Jan 2022.
Before then, we'll have earnings, a summer of potential, a fall of coming back, a few FOMC meetings and lots and lots of trading days. One working theory, if the narrative catches on, says Biden's socialist spending will raise prices on everything and stall any real economic growth we had. Trump had nearly doubled the stock market in his term, including the pandemic and really Biden didn't take over until Jan 20th, giving Trump an extra 13%, leaving Biden with less than 20% even with all this massive government spending and price increases on everything from wood to gas to pork. He's taking us back to the days before he was elected and consumer spending will begin to show signs of that.
And large swaths of investors will adjust their portfolios to account for that. And I think they'll be wrong (I've been convinced into agreeing inflation will be transitionary and probably won't send us into a stagflating spiral) but between the fear and the reality, opinion and hindsight of facts to prove it out, there are many trading days. And we'll swing both ways here and there, just a little. But options are cheap relatively, so a little is a good opportunity.
Before then, we'll have earnings, a summer of potential, a fall of coming back, a few FOMC meetings and lots and lots of trading days. One working theory, if the narrative catches on, says Biden's socialist spending will raise prices on everything and stall any real economic growth we had. Trump had nearly doubled the stock market in his term, including the pandemic and really Biden didn't take over until Jan 20th, giving Trump an extra 13%, leaving Biden with less than 20% even with all this massive government spending and price increases on everything from wood to gas to pork. He's taking us back to the days before he was elected and consumer spending will begin to show signs of that.
And large swaths of investors will adjust their portfolios to account for that. And I think they'll be wrong (I've been convinced into agreeing inflation will be transitionary and probably won't send us into a stagflating spiral) but between the fear and the reality, opinion and hindsight of facts to prove it out, there are many trading days. And we'll swing both ways here and there, just a little. But options are cheap relatively, so a little is a good opportunity.
I usually try not to tell you what to do -- too crowded there. I'll point out what price points/trends/patterns the pros are looking at and let you interpret what that means for your portfolio.
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