Morning Note: Knee jerk responses can be costly

I still hear people investing either through their 401k/403b or directly in the market are thinking about selling and hitting the sidelines.

In my opinion, this could be a mistake.

I delayed my morning note to later in the day to see if a pattern was forming with the market. So far, so good; it looks like I may be right.

The CPI came out yesterday at 9.1%. In previous posts, I thought we were at the high at 8.8% and could remain in the general range for a couple of months. The PPI came out this morning at 11.3%, just below the 11.6% we saw in March but still within what I see in my research.

In both cases, the market was set to open dramatically down, which is what the market did, but that is not how the market ended the day yesterday.

The PPI and bank earnings disappointed investors today, and the market had another significant decline for the morning. Still, as we move to the close today, the market is attempting another rally.

I believe some factors are occurring, and some investors are overlooking these. First, we have seen a 500-point swing in the Dow Jones Average in the past two trading days.

The Nasdaq has seen a 300 and 250-point swing in the same time frame.

Some investors or some institutions must be buying select sectors or investments, or the market would continue to drop. So money is being put to work for a reason.

There are two questions investors should ask themselves. One, have we seen the peak of inflation during the summer?

Two, will companies that have seen their prices decline by 40%, 50%, or 60% be higher a year from now?

I continue to hold to my bullish position for the second half of 2022.

I lost faith in the Federal Reserve's decision to call inflation "transitory" in the first place, but as long as they stay aggressive by increasing rates, a soft landing has a better chance of occurring than six months ago.

I welcome a 75 basis point increase, but a 100 basis point increase would not shake me up either.

Some asked me what are you doing or buying?

I won't get into what we are buying, but I will say that we are buying select holdings.

There are opportunities, but not everything is a buy.

We are not day traders and do not day trade our client's retirement plans.

If individuals want to pay with some money, I don't have an issue with them. However, people like their real money and can't afford to gamble on the highs and lows of the day.

Also, if you are going to brag about your $ 600-day gain on some unknown stock that you don't know much about, then be honest and share the $1,500 and $800 loss you took earlier in the month.

Remember, if investing was that easy, people wouldn't be concerned about retirement and wondering if they have enough money.

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