December 2023

November 30, 2023

I hope everyone had a Happy Thanksgiving!  Taking the time to reflect upon why we are blessed as a nation and to give thanks for all the abundance we have should also make us humble as well.  It is due to all of the natural abundance and amazing citizens and immigrants in this nation that we have what we have.  To that end, the small businesses, the lifeblood of much of the cities and towns across the US, drive so much wealth; and as we saw this month, they have been rewarded!  I’m also thankful for the large caps as well!  They are also the lifeblood for many Americans, through employment, fuel, food, home improvement, and of course, our technology (although I think we are seeing some weakness in the tech as of late).  The returns for all the mutual funds were fantastic this month!

With all the prose out of the way, months like this do give me pause as there will likely be profit taking, especially in the month of December, that could force the market to be negative.  Tempering this fear is the prior three consecutive negative months, so we might have been due a positive month, just not so positive.  I think one of the major drivers, and this is getting to be a broken record, is the speculation that the Federal Reserve might actually reduce rates in Q1 or Q2 next year.  Of course, it all depends on inflation and the GDP.  Right now, the current inflation rate is 3.2%.  This is so much lower than much of the last two years, that the Federal Reserve might cut rates before they get to the target as the inflation rate is a lagging indicator.  Wait too long, and they could trigger a recession.  We are seeing OPEC thinking a recession could be in the cards for the world as they are trying to cut their oil output, but the world GDP is still fairly steady at approximately 3%.  

Other factors that could influence the market but are not making much of an impact are the Russo-Ukraine War (yes it’s still going on), the Israeli-Hamas conflict (it’s not going to be the major destabilizer in the Middle East we thought it would be-I may eat those words), and the ever present US / China tension.  At least none of these seem to be a factor right now.  I’m only going to ever so slightly mention the virus in China, but I don’t think the world will shut down it economy again for at least the next 3 generations.

So, based on all of my metrics, the analysis above, and despite my small cap enthusiasm, I am back in the large caps 100%.  I wish everyone a Merry Christmas or Happy Hannukah or just a general Happy Holidays!  May our stockings be filled with fully funded retirement accounts!  Keep investing!