Patience is a key ingredient to long-term investing success. This past year we have been recovering from the 2022 bear market, and it has been a frustratingly slow process. The wind finally came back around to end 2023 with a strong rally, which we predicted and were well positioned for.
We continue to hear that higher interest rates are going to slow down our economy. Logic may say yes, but observation says no: In the 3rd quarter, the economy grew at 4.9 percent, which is far and away the best growth we have seen since the first quarter of 2021.
AI has become a mania. I am no technology expert, but I do know a little about how the market reacts to technological breakthroughs. The market response is a phenomenon called the Gartner Hype Cycle, and AI is at the peak of inflated expectations.
“How is your business?” I recently asked that question at three different locations for one of our clients and got three slightly different answers. These three stories are a great indicator of the actual impact the Fed has on the economy by raising interest rates: it depends on one’s perspective.
Does the Fed have any real power? Wall Street strategists are far more bearish than Wall Street analysts. The strategists see the current situation as driven by the actions of the Federal Reserve, while analysts see the world from the bottom-up, and it simply does not look so bad from that view.
