December 2022

November 30, 2022

A strong month in the books.  Many of you have probably noticed the returns for My Funds Coach are a day behind the posting day.  The way mutual fund pricing works would delay my posting time by several more hours.  However, with the market being as strong as it was today and this month, I'm comfortable stating all mutual funds above were in positive territory for the month and my selections for USAA and Fidelity were the best performing for the month.

Although this month was good, we do have some significant issues to deal with.  We remain in a recovery from the very shallow recession due to Q1 and Q2 GDP both being negative.  GDP for Q3 was revised upwards, but there are negative trends in the economy. Unemployment, while still very low, looks like it might be threatened by layoffs in the technology sector and a weakening housing market.  To temper these potential drags on the economy, the Federal Reserve finally showed their hand a bit more today and indicated a reduction in the pace of rate hikes, but he also indicated a higher target than we have lived with for the past 30 years.  I have stated many times I agree with the Federal Reserve and their interest rate hikes to get inflation under control.  That was an easy position for me to take, when they stop their interest rate hikes is the much harder prediction and we got some insight into Powell's thinking today and he must be seeing a cooling economy and a possible double dip recession.  

International headwinds on the economy, namely the disruption in China due to their zero COVID policy also seems to possibly be resolving itself, but the unrest may provide an inflection point to disrupt their entire economy for an extended period, however, international stocks look stronger now than they have been in a long time since they have had a chance to adjust to higher energy prices and the Russo-Ukraine War.

I'm still positive on the stock market and the economy, and the fear of a dramatic crash in either has been reduced.  I think we will see a more tempered December and January compared to November, but I remain cautious about many of the unknowns in unemployment and international unrest.  This may seem out of sync with my move to VFSAX, but China only represents 5% of that fund.  Keep investing!