It Seems the Fed’s Message Earlier this Month was Good Enough for the Market: Market Commentary from Cabana’s Ceo – May 14, 2024 

5 months ago

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Well, just like that stocks (the main indices) bounced back to reclaim their respective 50-day moving averages last week. Over four short trading days, investors put a technical end to the correction that began one month ago. Bonds have seen some daylight as well, with the 10-Year Treasury yield falling back below 4.5%. It seems the message from the Fed in early May was good enough once it was digested.  

I mentioned several weeks ago that the most important thing was that further hikes were not being considered. That was confirmed, and we are off to the races again. Last week is a great example of the futility of trying to predict the market over any short period of time. I have clients both retail and professional who get caught up in this folly – and it is folly. Investors suddenly become traders, and as I see it, traders almost always lose – in fact, according to this article (CNBC.com), more than 90% of day traders lose money. The odds don’t get much better over a week or a month. So, in my opinion, it is best to be an investor and have a process that you believe in and understand. Do not try to outsmart anyone, because you are not that smart. Be patient. Collect and reinvest dividends. Be diversified across asset classes. Be mindful of costs and taxes. Oh yeah and let me say it again… be patient. 

Investing involves at least a five-year time horizon. Think about that! I will close by including some wisdom from the great Warren Buffet who once said, “The stock market is a device for transferring money from the impatient to the patient.” 

Tomorrow we will get April’s CPI number. Economists are forecasting a 0.3% rise from March and a 3.6% rise year over year. The results may give us a good idea of how much more patience will be required. 
 
At Cabana, we are still in a Bullish Scene and are allocated across all portfolios accordingly. 

NOTE: The above is the opinion of the author and should not be construed as investment advice.  

Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of CabanaThe opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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Commonly used index/benchmark definitions:  

All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

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The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq