Weekend reads: Investors get a wakeup call
Also, a guide to the Fed's eventual policy pivot, the housing slowdown and good advice for air travelers.
U.S. investors have soured on stocks again.
The S&P 500 Index had fallen 23% through June 17 this year and then had reversed course to rise 17% through Aug. 16. Since then, the benchmark has fallen 8% as investors worry about rising interest rates and a possible recession down the line.
Jeremy Grantham, co-founder of GMO of Boston, warned that the stock market was still in a “superbubble” and that the recent rally had lulled investors into a false sense of security.
Meanwhile, Steve Hanke, a professor of applied economics at Johns Hopkins University, predicted a “whopper” of a recession in 2023, even with inflation remaining high.
Another warning: This corner of the credit market could be first to implode as interest rates rise
Prepare for the Fed’s pivot — eventually
Markets always look ahead. We are at an early point in the Federal Reserve’s cycle of increasing interest rates to reduce price inflation. But eventually the tide will turn, the pace of interest rates will slow before they eventually decline again and help feed a rise in asset prices.
Based on his analysis of the stock market during several previous interest-rate cycles, Mark Hulbert concludes that “there are hefty gains to be had if you get it even partially right.”
Here’s Hulbert’s approach to taking best advantage of the Fed’s eventual policy reversal.
The housing slowdown — good news and bad
The doubling of mortgage rates has driven some potential home buyers out of the market. Then again, houses are staying on the market longer now, and prices are beginning to fall. There is softening of demand, making it easier to shop for a new home.
More housing coverage from Aarthi Swaminathan:
- I hate living in New York City — I have a $450,000 condo unit. Should I sell it now — or should I rent it out and move to New Jersey?
- This tiny $3 component is holding up the construction of new homes
How to avoid air-travel delays
Charles Passy interviews Samantha Brown, who provides advice on how to avoid air-travel delays and steps you can take to be rebooked quickly if your flight is canceled.
Stock picks for these trying times
No matter what is going on in the world of finance day-to-day, stocks have proven to be excellent compounders of value over long periods. During a period of high inflation and rising interest rates, an emphasis on financial strength and competitive staying power might work best.
Michael Brush interviews Justin White, who manages the T. Rowe Price All-Cap Opportunities Fund and shares his approach for picking quality stocks.
More approaches to stock screening and selection:
- How to look back, and ahead, for a screen of quality stocks
- 20 dividend stocks with high yields that are expected to raise payouts the most through 2024
- These 2 dividend-stock funds use different strategies that work well in tough market times
Is it too late for me to invest for retirement?
Alessandra Malito writes the Help Me Retire column. This week she helps a 62-year-old man who has saved up some money but worries that it may be too late for him to invest and build up a retirement nest egg.
More: Two simple tasks to do right now if you’re in your 50s and planning for retirement
The importance of having a will at any age
Morey Stettner explains why you aren’t too young to have a will, and what to do if your estate plan gets complicated.
The down cycle for chip makers
This has been a difficult year for semiconductor stocks, as you can see on the two-year chart above, which shows total returns for Nvidia Corp.
NVDA,
Nvidia hit a new 52-week low on Thursday.
Chip makers have always been cyclical. Citigroup analyst Christopher Danley warned this week that semiconductor stocks could drop another 25%.
But Broadcom Inc. CEO Hock Tan defended his company’s rosy outlook after analysts pushed back.
The overlooked risks of self-driving technology
There are all sorts of driver-assistance features in modern cars, although the names for these features, such as Tesla’s
TSLA,
More coverage — electric vehicles:
- What will EV charging look like in the future?
- As new DeLorean EV concept emerges, it gets a little weird
- What California’s ban on gas cars could mean for you—even if you don’t live there
- Honda, LG Energy announce $4.4 billion plan to build EV battery factory in U.S.
Hear from Ray Dalio at MarketWatch’s Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The hedge-fund pioneer has strong views on where the economy is headed.
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