STOP BUYING STOCKS | The Market Is About To Bottom



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WHY THE STOCK MARKET COULD BOTTOM:

FIRST: The FED has begun to reduce their balance sheet.
This leads to what’s known as a “balance sheet runoff,” where the Federal Reserve begins to SELL their portfolio onto the open market, and REMOVE the money they receive from previously issued loans.

SECOND: Higher interest rates
SP500 returns have shown to be 3x LOWER in a rising interest rate environment…not to mention, there’s also data that suggests that we’re about to see an upcoming decade of subpar returns…only because we’ve experienced SO MUCH GROWTH, already…and, that should be considered.

THIRD: Tech Sector seeing largest job cuts since 2020.
This is often being referred to as a new “Pandemic Reset,” while companies re-evaluate future demand, cut costs, and adapt to an environment that isn’t flush with stimulus checks and low interest rates…. that, in turn, has the power to pull down the market alongside with it.

FOURTH: Stagflation concerns
“Stagflation” is a term that refers to a time when growth is slowing, unemployment is rising, and inflation continues to increase.

WHY THE STOCK MARKET COULD INCREASE:

FIRST: One analyses shows why the SP500 could be FAIRLY VALUED.
This chart shows the stock market’s value in relation to interest rates…and, as you can see…we’re trading right around NORMAL.
https://www.currentmarketvaluation.com/models/10y-interest-rates.php

SECOND: inflation may actually have started to decline.
A new report shows that monthly core inflation came in around 4% annually, down from 6% in the three months before it.

THIRD: Ending lockdowns after months
The expectation is that this should lead to SOME level of normalcy overseas…and that, in turn, will aid the economy, worldwide.

FOURTH: Rising Inventory.
It was reported that: “Inventory levels are high, as companies chased as much merchandise as possible to support demand, which has now slowed. Ultimately, markdowns and promotions are starting to pick up.” This should – HOPEFULLY – curtail at least SOME of the rising inflation numbers, which MIGHT lead the Federal Reserve to slow their rate hikes…allowing the stock market to pick back up.

FIFTH: Many segments of the market have ALREADY dropped – from peak to low – up to 90% at the worst, which wasn’t an insignificant drop, by any means.
Now, that’s not to say that things can fall EVEN MORE…but, this COULD be a realistic sign that valuations are beginning to approach a level that’s MORE in line with what the market can reasonably support.

SIXTH: It seems as though there’s a LOT of pessimism out there that the markets WILL go down, and it WILL get way worse…and that almost makes me think that, if the majority of people BELIEVE that…then, it’s less likely to happen?

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