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After today’s wonderful rally in tech stocks, where does the market go now? A guaranteed way to block spam calls

I feel guilty. I’m uncomfortable picking which stocks to buy, given our volatility. Let me explain:

We’re in a recession  — however you define it.

There’s going to be more “recession,” since the Fed has to bring inflation down.

The Fed  has one very blunt weapon — hike interest rates.

The Fed’s “magic” is working directly on the key areas that higher interest rates can work on – i.e. real estate (including housing), cars (new and old) and some infrastructure expansion.

As these areas lose steam, the economy will contract and hopefully decline. Hence inflation will ebb, which we’re already seen big-time in major areas like oil.

The market has been volatile — up and down sharply — since the Fed got under way.

Here’s the last three months on Nasdaq (which is chiefly tech stocks), with a big jump today:

Where now?

Watch BubbleVision (financial TV’s talking heads). You get hugely conflicting (and confusing) opinions and predictions — none of which are basically “actionable” — except to ignore them.

Joel Ross writes an excellent market letter. To subscribe, click here. His latest letter sums his feelings up:

Where does the stock market go from here. The true answer is, nobody has any idea. There are so many black swans now that the unknown unknowns are too numerous to assess risk. Having said that, my assumption is the market will rally further for a while, and may rally more in 2023. That is because the market has priced in a lot of risk, and a lot of downside. As we see from Apple, Microsoft and Thermo Fisher, as an example, the strong, well capitalized companies with great products, and strong innovation, will thrive regardless. Quality counts. Innovation counts, and strong cash flow matters. Their stock prices have been beaten down to the point that as long term investments they are sound, and there is unlikely much downside from here for companies with these attributes, of which there are several.

I have been nibbling recently. My major holdings are two Vanguard ETFs — VGT (technology) and VTI (the entire market– basically identical to the S&P 500.).

There is a wonderful article by Jeff Sommer in Sunday’s New York Times business section:

Prepare for Trouble, But Keep Investing
Rates are rising, inflation is nasty and a painful recession is certainly possible.

Important pieces of information arrived over the last few days, but they do nothing to clear away the fog blanketing the markets and the economy.

Is the economy lurching into a recession? Is inflation coming under control?

Clear answers are important for anyone who has a job or hopes to get one, anyone with bills to pay, a house to buy or sell, an apartment to rent, a loan to make or repay, or investments to worry about. Really, for just about everyone.

But nobody has those answers.

It would be better, obviously, if there were more clarity, but it simply does not exist. Prudent people will need operate on two tracks: preparing for short-term trouble, while investing for the long term. …

The Fed is using its tools to induce people and businesses to demand less in goods and services. Mr. Powell says he hopes to give the economy enough “slack” so that inflation will cool down.

The problem is that while the Fed can affect demand, it has no control over the supply of goods and services.

The pandemic and the war in Ukraine created many of the shortages and bottlenecks. Yet there are some signs that they are already easing.

The Baltic Dry Index, which tracks global shipping prices, has fallen 40 percent since its peak in May. And surveys of the economies of the United States, continental Europe, Britain and Japan show sharp declines in “supply lead times,” as well as in inventory buildups.

He concludes:

I’m agnostic on the recession question. Not knowing where things are headed, I always hold a mix of stocks and bonds and use cheap index funds to do it. Will the bear market in stocks end? Yes, if there’s no recession. But if there is a deep one, stocks could take a further pounding. Nonetheless, for those with long horizons — a decade or more — buying stocks steadily, through broad index funds, is likely to be a good bet.

I agree.

See Sommer’s full article here.

How to get rid of junk phone calls

You can register them. You can block them. But the spammers change numbers and keep calling. Here’s The Harry Newton Solution:

Swipe your iPhone from your top left, you’ll get the first screen. Touch Do Not Disturb, then click away until you find the second screen.  Then Allow Calls from only your Contacts. All other calls will go straight into voice mail. Most junk calls don’t leave voice mail. So that’s good. Problem solved. Your phone is peaceful. You can nap.

   

I am in love with sugar plums

I took the left picture with my iPhone 13 max plus. As an experiment, I turned on the flash for the right picture.  The left picture is more accurate. Moral: Don’t use the flash on your iPhone.

We designed and built our country house 17 years ago

Here are what we should have done:

+ Installed two of every appliance — dishwashers, washing machines, microwaves and refrigerators. That way when one is busted, we’ll still have another one. It took us a year to get new Miele dishwasher.

+ We should have carefully checked the design of the AC. Our system cools the hall, two closets and a toilet. Whoever designed our system was a moron. I should have checked the layout. There are a zillion AC systems, some more reliable (and easier to maintain) than others. Want the most reliable system? A window unit. Ugly. But easy to fix. Go to Walmart or Home Depot and buy a replacement. Central AC units can be erratic, and ultra-hard to fix. We’re awaiting replacement units. And waiting.

+ Place your fiber router in the middle of your house and run Cat 8 cables to distant outlets. That way you won’t have to completely rely on centralized Wi-Fi, which is as reliable as central air conditioning.

+ Most importantly, resist complicated, unreliable technology — like built-in electric blinds, ceiling music systems and satellite TV.

Our builder told me that to replace our house today would cost more then twice what it cost 17 years ago.

Favorite Verizon Message

I’ve bitched about this Columbia County, NY problem to Verizon for over 30 years. They never respond positively. They also lied about my $40 bill on my monthly bill if I paid by debit card. I pay three Verizon cell phone bills. All three are different. Who knows why.

Them’s good reasons I’ve never owned Verizon stock. The other reason is that it’s a dreadful stock. Here’s its past ten years:

And this morning I read:

 — Verizon shares dropped 6.7% after the company cut its full-year forecast and said it added 12,000 net retail phone subscribers, far below the 144,000 estimated by StreetAccount. Adjusted quarterly earnings fell short of estimates, according to Refinitiv.

It’s now yielding 5.6%  Good investment rule: Always ask if a stock has a high dividend yield, is it likely to fall further? It has a P/E of 9.1. Its price can go lower.

We needed it quickly

So we opted for Pickup from Walmart. The process was a nightmare — from the order to driving around Walmart’s parking lot looking for “Pickup.”

The stunner was this – the below order minimum fee! Go figure.

A neat skill?

Czech climber Adam Ondra free-climbing El Capitan in Yosemite National Park. Adam Ondra is a Czech professional rock climber, specializing in lead climbing and bouldering. Rock & Ice magazine described Ondra in 2013 as a prodigy and the leading climber of his generation.

The best political cartoon ever?

Tesla soared 2.27% today. Its P/E is 108.24.

The average P/E over the years of the S&P500 stocks is under 20.

See you tomorrow. — Harry Newton