well, let's turn back to the major indexes joining
me now is Lauren Gilbert, founder and president of
wealth wise Financial Services, which offer securities and investment
advisory services to individuals, business owners and corporations,
Lauren thanks for coming on the show another day of
losses. We did end back near those session lows
. What's your take on the market action? It
is going to be a volatile rest of the year
as the market sort out what is happening with rate
hikes and how that's re priced into the market.
And that's what we're seeing right now. We're still
seeing a re pricing that now after Powell spoke more
likely of 75 basis points. And And he made
a very short but succinct speech and that speech was
really Paul Voelker 2.0, mentioning Voelker twice in his
speech. And also see saying that we are going
to keep at it. Which of course Paul Volcker's
book was called keeping at it. So I think
what we can expect is a very restrictive fed going
forward. Certainly, a more restricted Fed Lorraine,
I think that is starting to get priced into the
markets as we speak with the losses today. What's
your read on the economic data, we're gonna get
another data point as the Fed maintains that it is
data dependent come friday when we get that jobs report
for the previous month, the month of august that
is do you expect that the jobs market is still
holding up? It is. And so when you
really do look at the data, the data is
still good. And when we we look at what
the Fed is looking at which the floors or the
inflation numbers we have seen a roll over there.
Um And so with that, what they want to
see is does that continue? So they're not as
concerned about the job market. They made that really
clear that they understand that there will need to be
a softening there. Uh and that that's going to
happen as they continue to raise rates. So all
eyes are on inflation debt. Mm hmm. Now
I know you mentioned a volatile stock market going forward
. Lorraine, how does this impact corporate America right
? Because during normal times corporate earnings is what fuels
the stock market higher as the second quarter earnings season
reporting season. That is is basically winding down and
coming to a close, what do you know about
the health of corporate America? But the good thing
is this last quarter, the numbers that we saw
were quite good. I mean when we look at
6% year over year, 6-7% year over year growth
on earnings growth, that's that is solid. Given
all the headwinds that have been there, all the
price increases, all of the headlines that we've seen
in the market. So with that earnings are still
good and what we can expect to see is that
that will continue to soften but hopefully not run off
a cliff either. Certainly that would be some good
news. I know inflation is keeping consumers at bay
a bit here. Lorraine? We still see the
affluent consumer came to spend, I think Apple orders
for that big event that will get next week would
show that. But even consumers lower income consumers to
dig deeper and deeper into savings actually to get by
, whether it's rent, shelter, mortgages, even
gas prices, which we saw elevated earlier in the
summer and food prices as well. Do you think
inflation still is a major concern that the Fed is
going to struggle with a head? It is.
And so what Powell mentioned is that there is pain
ahead for consumers and for businesses and of course that
shook up the markets. But really that's what he
wants to do is, in a sense, what
he doesn't want to see happen is that inflation becomes
embedded into the economy and with that you have consumer
expectations about inflation coming down, which is good news
, but he wants to see that continue to come
down and for the consumer not to expect inflation to
be a big headwind. And for corporations as well
. And we've been hearing that on earnings calls.
We don't want to see corporation continue to embed that
in their costs and be concerned about it. It
should be something that we know is there, but
not there to the extent that we have to always
talk about it. What is your firm Laureen advising
clients do in this scenario? Do they stay on
the sidelines? Do they put some money to work
? If they are putting money to work? What
is your firm recommending that they buy? Well,
I definitely we're looking at companies that are producing dividends
because in a higher inflation environment dividends are important.
And when we look at the S&P 500, we
can look at companies that have more than 2% dividend
yield and less than 2% dividend yield. And we
see a stark contrast there between those two areas.
on companies that in a sense, are overvalued with
their pes and those that have more reasonable valuations.
And we're focused on those companies with more reasonable valuations
and with higher dividend yields. And that's where we're
encouraging investors to have more of their allocations. And
do you expect that that will continue to be the
case at least through the end of the year.
As if that does continue to raise rates we do
. And another area that we're looking at is for
for our investors to go longer in duration on their
fixed income side of the portfolio. So dividend paying
stocks and then large longer duration on their income side
of the portfolio. And still maintaining a balance between
equities and fixed income, even though the first half
of the year was definitely difficult. Um Both sides
were looking at a better second half also when we
look at the fact that we're in a midterm election
year. Most midterm election years are somewhat rocky going
into that election. And then we see the market
tick tick up towards the end of the year and
we're expecting the same site, sort of sick,
seasonal, uh, ramp up at the end of
the year as well. I think one question that
investors have is, you know, people do try
to time the market whether or not that's the right
call, people do try to time it. They're
wondering, are the mid june lows behind us,
even though many people would say time in the market
is more important than actually timing the market, including
one of our guests earlier today on the show.
But I think a lot of people were actually caught
flat footed at the start of this year. They
were hearing positive signs that the, the economy was
going to improve, the consumer was still going to
improve. And then basically stocks just started cratering from
january all the way until those mid june low.
So if we look out 12 months from now,
right, knowing that taxes play a factor in this
as well? Capital gains taxes. That is,
do you think that consumers might be getting a better
deal perhaps in the early months of next year versus
the levels that we're at right now? Well,
I think that investors need to look at their goals
. Absolutely. But one thing that we've been doing
is taking losses on client accounts where we could and
setting ourselves up for future gains in resetting basis.
So I think that's something that investors should look at
oftentimes that's looked at at the end of the year
. But this is given this year and what's happened
so far this year now is a good time to
look at that. And then we're also telling investors
over the next number of months, it's a good
time to dollar cash, average cash into the market
. So you can put money in over the next
few months. And if you look at it as
a five year or 10 year outlook, uh,
then putting money in over the next few months would
be a good idea. Looking at more of the
longer term, uh, scenario Lauren my final question
to you is just in terms of overall investments right
now, dollar cost averaging something that I think many
people have recommended on our show, but for viewers
who might not completely know what that is, explain
that to me and how you would approach that as
an investor. So dollar cost averaging is the sense
that the markets, you're never gonna catch the low
of the lows and hopefully not catch the high of
the highs if you invest over a period of time
. So if you just took money over a three
month period and said, I have a million dollars
to invest and I'm gonna do that over the next
three months and invested in third, a third and
a third, then you're going to capture different points
in the markets. So that is one way to
approach volatility when we're seeing a lot of volatility.
Some people, on the other hand, just say
, you know, let's go ahead and get invested
because I am a long term investor. And despite
whatever market volatility we're going to have all over time
, it's not going to matter that much. So
people take things different ways. And so we talked
to each investor about how they want to approach it
. The dollar cost averaging means putting your money in
a different points in the market and doing it succinctly
over a period of time. All right, Lauren
Gilbert, founder and president of wealth wise Financial Services
. Lauren, thank you.