Stock Talk - Retirement Investing: Will The Stock Market Perform Different This Time? What to Know

Starting point is 00:00:00 Investors, October option expiration week ended on Friday, October 20th, and we closed on a down note. Both short-term volatility, as measured by the often-mentioned Untradable VIX index, and volatility futures, which are traded, both spiked to a new five-and-a-half-month highs, last seen on May 4th. Not totally unexpected, but nerve-racking to investors and nerve-wrecking for others. The general explanation for the sell-off was to blame a quick rise in market-based interest rates caused by a few things. One, continued hawkish Fed speak. Two, rampant federal government deficit borrowing and refinancing

Starting point is 00:00:37 causing Treasury market supply to exceed demand. And finally, stronger than expected economic data for the third quarter. In addition, while the Oak Harvest Investment team has discussed with our subscribers and clients for over 12 months since the market lows in October 2022, the importance of real interest rates to the stocks and bond market, that is, the risk premium embedded in Treasury bond markets, the wider financial press and Wall Street strategists have finally come out talking in mass the last few weeks, talking about real rates and not the importance of inflation on bonds, being critical. I say better late than never? Not always. Last week's title was it's make or break

Starting point is 00:01:18 time. And this week, given how busy our investment team is with earnings report, I'm keeping this video short. Its title is it really different this time? Investors, please take a moment to click on both the subscribe and notification bells so you'll be alerted when our investment team uploads our latest content. Or better yet, give our O'Carvest team a call at 877-896-040 to speak to our team and set up an initial consultation with an O'Carvis financial advisor to discuss your personal financial situation. O'Carvis Financial Group manages broadly diversified equity portfolios that balance risk and reward for our clients. The investment tools our advisors and financial planners use are usually a combination of both market-based and insurance-based tools to meet your retirement goals.

Starting point is 00:02:01 We have an in-house dedicated investment team that's busy working on some new tools for our advisors and retirement planning teams to use in the future. Stay tuned. The future in the stock markets are always uncertain, and that is why our retirement planning teams plan for retirement needs first and your agreed second. Investors, the S&P 500 has been trading down and to the right in a very normal seasonal fashion since the mid-July 4600 peak. Take a look at the chart of the S&P 500 since the last October's lows. You'll see the overall market has gone nowhere since mid-June of this year and closed almost on top of its 200-day moving average a week ago. We have now entered what has historically been the sweet spot of the seasonal calendar for a fourth quarter rally. I've had these dates circled on my

Starting point is 00:02:44 calendar since October 2002. Yes, viewers, for over a year. Now with the markets down and while reviewing the news on the financial networks, it's very easy to question one's investment methodology and wonder if it's different this time. I'm giving you two charts of real-time data that have proven early to tops and bottoms in the market the last few years that many on TV are discussing as important, but apparently not following in real time. The first chart is the one of real interest rates that suddenly many on the financial news networks have discovered after almost 18 months. They finally discovered its significance. I've discussed the importance of these real interest rates to stock PEs in the markets for over a year now. I've shown charts of the one year,

Starting point is 00:03:26 two year, five year and 10 year real interest rates at different times over the last 12 months. Their absolute levels all vary. However, the shape of their charts are pretty much identical, up until the right, since late December 2021. However, investors, just as many others, have now discovered their importance. Guess what has happened? The trend, which they mostly ignored for 12 to 18 months, has finally changed. month up trend has finally been broken. Investors, this cycle, this has been an early indicator for good things to come. Look at the similar prior peak from this level. What was the date of that peak? Yes, it was Christmas 2018. Investors recall what the stock markets did after Christmas

Starting point is 00:04:08 2018? Yes, they did. They v-bottomed and vaulted higher for the next three to five months is the Fed walked back some of their overly aggressive, hawkish commentary in tone. The markets exhaled and rallied against the backdrop of negative calls for further market weakness. It appears to me the Fed is already hinting to the markets that they've done enough on the interest rate front and are willing to sit back and watch how the year-end plays out. Investors, the second and final real-time data series I want to discuss is the dollar. For this cycle, dollar weakness has been good and dollar strength has been bad for stocks. That's most likely because so much of our large-cap stock earnings come from overseas.

Starting point is 00:04:48 dollar strength marginally hurts the S&P 500's revenue and earnings growth rates, while dollar weakness helps both. Take a look at the chart of the broad dollar index. Most investors look at the DXY index, also known as the Dixie. If you overlay a chart of the S&P 500 on this chart of the DXY index, you would see rallies and selloffs in the S&P 500 would coincide in an inverse way with rallies and selloffs in the DXY index. While the stock market was selling off at the end of the week on October 20th, few TV commentators were looking at these two data series in real time. Both of these real-time data series would argue that the market should be bottoming shortly in their very normal seasonal way. It's the Oak Harvest Investment Team's opinion that no, the summer sell-off that we

Starting point is 00:05:34 forecast from July was not different this time, and the seasonal Santa Claus rally that usually starts late October and lasts into late December and potentially extends into a volatile manner in the first quarter of 2024 won't be different either. Investors, that's it for the week. The market has pulled back and volatility is spiked as our team expected. We are finally in a very important time for the markets in both price and time. The pullback has created some value across the market and our team is looking at new opportunities. Please give us a call to speak to an advisor and let us help you craft a financial plan that helps you meet your retirement goals.

Starting point is 00:06:09 Call us here at 877-896-0-0-40 and schedule an advisor consultation. We're here to help you on your financial. journey into and through your retirement years. From the whole team here at Oak Harvest, have a blessed weekend and a happy Halloween. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast

Starting point is 00:06:48 should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing, involving the risk of loss and past performance is not indicative of future results.

Stock Talk - Retirement Investing: Will The Stock Market Perform Different This Time? What to Know

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