Are We There Yet?

The dreaded question of my children during our road trip to Yellowstone last year. Impatient and sick of the road, they’re desperate to get out of their seat. What’s the solution? Snacks, screens, sleep… whatever it takes to keep them in their seat…for 14 hours!

When we’re investing in the stock market, the road can feel long. We get impatient, a little car sick, we want out of our seats because we’re tired of the trip, and we ask, “Are we there yet? Are we at the bottom yet? Will the market rebound now?” 

I’ve been asking these questions this week as the Federal Reserve raised interest rates by 0.50%. The market went straight up, over 3% yesterday because it was relieved they didn’t raise them more. Only to watch the stock market go down a similar amount today because the same issues still persist.

So, are we there yet? Are we at the bottom? Typically, it’s impossible to know when the market has bottomed until we’re months past it. Like picking out a valley when you’re on a peak, it’s easier when you’re out of the woods.

Since we never know exactly when the top or bottom is, we pick levels to sell the gainers on the way up and buy stocks on the way down in our Growth Stock portfolio. We’ve bought several stocks already with the cash we generated from selling. With the market down again last month we bought another. The favorite store for a lot of us, we bought Costco this week.

We believe Costco has one of, if not the most, sticky and loyal customer base. They should be able to pass on higher costs to the consumers (unfortunately) and are due for a membership price hike soon which will help boost the stock. The stock is down greater than 10% from its peak and that was enough for us to jump in.

It’s important to remember we have a 3-5yr time horizon on these stocks and the volatility we’re seeing in the stock market corresponds to short-term fears regarding inflation, war, and China lockdowns. 

Things could improve dramatically if the inflation number comes in LOWER than the 8.2% expected next Wednesday. If it’s HIGHER than that number, the road will get longer, more irritating, and the inevitable rebound will be pushed out.

Regardless if that rebound is next week or next year, the best way to get where we all want to be is to stay in our seats and wait for the news to turn. It’s our job to help you do that. Please call us, email us, or come in to see us, so we can talk you through the road ahead.

Thanks for reading,

 Tim Porter, CFP®