“Investing for women is not a nice to have, it is a must. The stakes for women are much higher.”
- Stacy Francis, Founder & CEO of Savvy Ladies, a nonprofit providing free financial advice for women

Happy Thursday,

The S&P, Dow, and Nasdaq were all up again in November. That followed an up month in October when the markets found lots to celebrate. In November, the S&P was up 5.3%, the Dow was up 5.6% and the Nasdaq increased by 4.3%.

In our view, the market continues to be driven by two divergent realities. On the one hand, the Covid-19 recovery, job creation, and consumer spending are all pointing the economy in a positive direction. On the other hand, the markets are reacting to stubborn inflation in the U.S. (caused in part by the government support payments) and the global supply imbalance created by the war in Ukraine. These two competing realities have upset the markets, but we are in this for the long term, so we need to keep a steady hand and look to add value investments in the short and medium-term.

That said, November continued the recent general market volatility, and we believe the markets will remain uncertain for the rest of 2022 and into the first half of 2023. Our portfolio, which includes a significant amount of hedging, is down 4.3% on a one-year basis, and up an annualized 21.1% on a ten-year basis.

The S&P was up 5.3% to 4,079 in November as the markets continued the rotation into only the best value investments, especially those companies that are profitable and have reasonable valuations, but you must be selective in picking the best of the crop.
The Dow was also up 5.6% to 34,570 in November as the markets continued the rotation into only the best value investments, especially those companies that are profitable and have reasonable valuations.
The Nasdaq increased 4.3% to 11,465 in November as Tech and Growth stocks continue to show some weakness based on their inferior fundamentals.

In November, Covid was a non-factor, but recent Fed dialogue continues to be somewhat hawkish which has cooled economic expansion expectations. The last four Fed hikes have been 75 bps which have helped cool the economy and reduce inflation, but they are not finished yet. There will certainly be smaller rate hikes in December and beyond since the Fed is beginning to see real inflation reduction (target is 2-3%). The Fed is still "data dependent" and is trying to manage a "soft landing”, but it is still possible that they may cause a recession or stagflation in 2023.

In December, we believe the public markets will continue rotating to value stocks with real earnings and lower valuations and continue de-valuing growth stocks that have little/no earnings or have high valuations. Back in January 2022 we increased the cash/bond part of our public equities’ portfolio to 60% and in December we expect to increase that to 70% so we can take advantage of future buying opportunities at lower prices in 2023.

In equities, we especially like the Financial, Industrial, Energy, and Utility sectors where values are still very reasonable. We like profitable value and growth stocks like Morgan Stanley, Berkshire, Google, BofA, Apple, Oxy, Chevron, Exxon, and Consumer Staples which all continue to be top selections as we view them as stronger and more nimble competitors in their respective sectors, and they are not over-exposed to China and Russia. View our latest Top Ten investments here.

Thanks again for your consideration and ideas. Have a great December/Q4 2022! Happy Holidays!

Best regards, 

Vincent M. Oddo
Managing Partner
PointFour Capital, LLC