The Internet is full of rags to riches stories, whereby Joe Dirt bet it all on a hot stock tip and got rich overnight.

Interest rates continue to be the the proxy for everything: the fed, inflation, the stock market and the “recession.” As you can see in the following chart, the market’s latest pullback (green line) began shortly after…

Here is a look at the S&P 500 (including its 20-, 50- and 200-day moving averages). As you can see, it’s still down significantly this year, but has rebounded hard since June. The question some investors are wondering is if they should take some chips off the table before the downtrend resumes. Afterall, inflation is still sky high, the fed is still raising rates aggressively and your account balance is likely a lot higher than it was 2-months ago. We share a few data points and our opinion in this note.

Here is a look at the volatile performance of some of the largest and most popular semiconductor (chip) stocks so far this year. As you can see based on the green bars, performance has been very strong over the last month, but they are still down a lot this year (red bars). Some investors may view these stocks as still too expensive based on the current valuation (EV/EBITDA), but that is not necessarily the case when you compare these stocks to their strong revenue growth rates (this year and next) and their very healthy net margins.

It’s been an ugly year for top growth stocks. The fed has been raising rates aggressively to battle sky-high inflation, and that has the side effect of causing high growth stocks to sell off particularly hard. For example, here is a look at 50 high-growth stocks (those with very high expected revenue growth rates for this year and next), sorted by market cap (and as you can see—the year-to-date total return column has a lot or red!).

With pre-market futures showing gains before the market officially opens for this week, some investors are growing concerned the short-term rally has gone too far. This morning’s opener shares a few brief data points, and then concludes with some very strong advice—a bit of a warning actually!

With the market posting strong gains over the last month (particularly high growth stocks) it can make sense to focus on areas receiving less attention. And in this report, that includes big-dividend investment opportunities that are still down big year-to-date. More specifically, we share data on 70 investments that currently yield over 7% and have experienced significant share price declines so far this year. The list includes REITs, BDCs, CEFs and more.

Stocks have posted strong gains over the last 3-weeks, but a lot of investors remain fearful that this year’s painful downtrend will resume. After all, inflation is sky high (9.1% CPI), the fed is expected to hike rates another 50pbs (possibly 75bps) at its next meeting (which will slow economic growth), and the 10-year treasury yield (2.68%) has dipped (over the last 3-weeks) and remains inverted versus the 2.85% 2-year treasury yield (a strong recession indicator).

As you can see in the following chart, the market (as represented by the Nasdaq 100 (QQQ)) has been terrible this year, but things have perked up in recent weeks. This update/report reviews the causes of this year’s declines and the data points supporting continued recent market perkiness. We conclude with our strong opinion on how you may want to position your investment portfolio going forward.

Pre-market equity futures are slightly up as we head into a huge week for new economic data (fed meetings, GDP report and lots of corporate earnings announcements). Obviously equity markets have been ugly this year (the Nasdaq 100 is ~25%), but we’ve seen signs of a recovery in the last two weeks (e.g. rates down, equities up). For a little more perspective, consumer sentiment is also very low, but has picked up a bit recently. Here is a reminder of how markets often perform following low points in the Michigan Consumer Sentiment Index.

With pre-market futures trading higher, and the market now a bit above its year-to-date lows, some investors are wondering if the selloff is finally over. To the contrary, this market can absolutely go lower from here, but in the long-term we believe “this too shall pass” and this market is eventually going higher. And the next cycle higher will likely be dominated by a new batch of “high growth” stocks. For your reference, here is a look at 28 of the highest revenue growth stocks (this year and next) that have not already grown very large.

The S&P 500 is down 18.5% year-to-date and performance has been wide ranging. It’s highly unusual for a large swath of the index to be down over 40% and another group to be up more than 20%. But a look under the hood reveals many of the top performers have been “safety plays” such as lower beta utilities and pharmaceutical companies, and many of the worst performers are great companies now trading at very attractive valuations. Those who chased high growth at the end of 2021 got burned. Will those now flocking to high-flying energy and low-beta utilities stocks soon get burned too?

Futures are lower this morning as we head into a week of (1) new monthly inflation numbers, (2) the start of a new earnings season and (3) energy sector prices that have sold off hard over the last month.

With futures pointing higher, the market is set to rise for a third day in a row. And some investors are starting to think these gains are different than the dead cat bounces we’ve repeatedly experienced this year because this time commodity prices are down, the dollar is strengthening and the fed may finally be ahead of inflation.