Projecting The Market Response To The Fed This Week

The Federal Open Market Committee convenes for its upcoming meeting on Wednesday and Thursday of this week. In play at this meeting to discuss U.S. monetary policy is whether the Fed will raise interest rates for the first time in a decade with a quarter point increase off of the zero bound. The market promises to be completely transfixed by this gathering that will culminate with a post meeting press conference by Fed Chair Janet Yellen on Thursday afternoon, not long after the meeting statement is released at 2PM. So given the importance of this upcoming meeting to investors, exactly what can we reasonably expect from the stock market in the coming week both leading up to and following the meeting and press conference? If history is any guide, the stock market may be setting up for a positive week regardless of how the Fed moves.

Please click on the link to read more of my article on Seeking Alpha.

Why My Nose Is Bleeding

Stocks are expensive. In fact, they are collectively about as expensive as they ever have been. And if interest rates continue to rise, as some are projecting, it threatens to bring with it a world of pain for stock investors. Valuation matters, and it is a point that investors should not overlook as we move forward in these unchartered capital markets of today.

Please click on the link to read more of my article on Seeking Alpha.

Stress Test For Dividend Growth Investors

A surge of newly minted dividend growth investors has flooded into the stock market over the last several years. Their arrival has been driven in large part by necessity, as zero interest rates for more than six years running have forced many retirees and individuals living on fixed incomes that would have otherwise been parked in FDIC insured certificates of deposit into the stock market in a desperate search for yield. Fortunately, the stay for these generally low risk tolerant investors has been most fruitful thus far, as their time has been filled with nothing but steady gains with relatively low price volatility. Unfortunately, the generally placid environment for stocks over the last several years has for many of these investors also bred a false sense of confidence – in some instances outright hubris – for it has obscured the meaningful underlying risks that not only continue to fester under the market surface but have also been building the longer the current bull market runs. Given that many of these relatively new dividend growth investors have never experienced any other market circumstance other than rising stock prices, it is worthwhile for these same individuals to stress test their portfolios to ensure that they are truly comfortable with the risks that they are taking in dividend stocks today.

Please click on the link to read more of my article on Seeking Alpha.

Graying Bull

The stock market is looking tired. After a furious bull market rally that has run for more than six years now, any extended period of consolidation is more than understandable. This is particularly true given the fact that underlying economic fundamentals remain dubious at best and valuations remain at historical peaks with corporate earnings now on the fade. But with global central bank liquidity still freely flowing, the fuel undoubtedly exists to continue propelling markets higher. Thus, the lingering question as we look out over the remainder of the year including the seasonally weak period from May to October is the following: can stocks continue their improbable rally for yet another year, or will the graying bull finally expire.

Please click on the link to read more of my article on Seeking Alpha.

Keeping Perspective

The U.S. stock market rally during the post crisis period seemingly will never end. It is already the third longest bull market in history, and what is particularly remarkable is that it has come in the immediate aftermath of what has been the worst financial crisis since the Great Depression. Of course, the U.S. stock market owes much of its gains over the last many years to the very remedies provided by policy makers to try and fix the global economy from the crisis, so perhaps these gains are less remarkable than they are artificial and ultimately unsustainable. As a result, you may be among the group of investors whether you are currently allocated to the market or not that believes in your heart and mind that all of this will end badly, yet in the meantime you are watching the stock market rise day after day. What is such an investor to do? Hold your nose and dive fully back into stocks, thus exposing oneself to the risk of buying at the top? Or continue to stand back and watch the stock market endlessly rise for what could be a few more years?

Please click on the link to read more of my article on Seeking Alpha.


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