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By Philip van Doorn
Also, a guide to a possible Fed policy reversal, slowing the housing slump and top tips for air travelers
U.S. investors turned sour on stocks again.
The S&P 500 fell 23% through June 17 this year and then reversed course to rise 17% through August 16. Since then, the benchmark has fallen 8% as investors worry about rising interest rates and a possible recession in the future.
Jeremy Grantham, co-founder of GMO of Boston, warned that the stock market is still in a “superbubble” and that the recent rally has lulled investors into a false sense of security.
Meanwhile, Steve Hanke, a professor of applied economics at Johns Hopkins University, predicts a “huge” recession in 2023, even if inflation remains high.
Another caveat: this corner of the credit market could be the first to collapse as interest rates rise
Prepare for the Fed’s reversal—eventually
Markets are always forward looking. We are at an early point in the Federal Reserve’s cycle of raising interest rates to reduce price inflation. But eventually the tide will turn, the pace of interest rates will slow before they eventually fall again and help asset prices rise.
Based on his analysis of the stock market during several previous interest rate cycles, Mark Hulbert concludes that “there are serious gains to be made if you get it even partially right.”
Here’s Hulbert’s approach to making the most of a possible Fed policy reversal.
The slowdown in the housing sector – good news and bad news
Doubling mortgage rates have driven some potential homebuyers out of the market. On the other hand, houses are now staying on the market longer and prices are starting to fall. There is a softening in demand that makes it easier to shop for a new home.
More housing coverage from Aarthi Swaminathan:
How to avoid delays when traveling by plane
Charles Passey interviews Samantha Brown, who gives tips on how to avoid air travel delays and the steps you can take to get booked quickly if your flight is cancelled.
Selected stocks for these trying times
No matter what happens in the world of finance day to day, stocks have proven to be excellent value creators over long periods. During a period of high inflation and rising interest rates, an emphasis on financial strength and competitiveness may work best.
Michael Brush interviews Justin White, who manages the T. Rowe Price All-Cap Opportunities Fund, and shares his approach to picking quality stocks.
More approaches to stock screening and selection:
Is it too late to invest for retirement?
Alessandra Malito writes the Help Me Retire column. This week, she’s helping a 62-year-old man who has saved some money but worries it may be too late for him to invest and build a retirement nest egg.
More: Two easy things to do now if you’re 50 and planning to retire
The importance of having a will at any age
Maury Stettner explains why you’re never too young to have a will, and what to do if your estate plan gets complicated.
The down cycle for chipmakers
It’s been a tough year for semiconductor stocks, as you can see in the two-year chart above, which shows the total returns for Nvidia Corp. ( NVDA ), the leader in the computer display adapter industry, the iShares Semiconductor ETF ( SOXX ), and the S&P 500.
Nvidia hit a new 52-week low on Thursday.
Chipmakers have always been cyclical. Citigroup analyst Christopher Danley warned this week that semiconductor stocks could fall another 25%.
But the CEO of Broadcom Inc. Hock Tan defended his company’s rosy outlook after analysts pushed back.
The overlooked risks of self-driving technology
There are all kinds of driver assistance features in modern cars, although the names for these features, such as Tesla Autopilot (TSLA), can be confusing or inaccurate. Claudia Assis takes a deeper look and describes two ways your smart car technology could be doing you more harm than good.
More coverage – electric vehicles:
Hear from Ray Dalio at the MarketWatch Festival of the Best New Ideas in Money on September 21st and 22nd in New York. The hedge fund pioneer has strong views on where the economy is headed.
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– Philip Van Doorn
(END) Dow Jones Newswires
09-03-22 0821ET
Copyright (c) 2022 Dow Jones & Company, Inc.
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