Here you will be able to find communications from the RIM team as well as helpful resources and articles.
After a rocky 2022, bonds are yielding a reasonable return again, at least if you ignore the effect of inflation on the real value of your investment. Stock valuations are at levels not sustained since way back in 2014, as measured by the popular price/earnings ratio (trailing twelve months of earnings). If you thought 2022 felt bad, it’s because it was bad.
A strong summer rally gave some hope that the bear market was over, and we could all get back to making copious amounts of money. The month of September put an end to that hope.
Stocks are still expensive, but momentum is clearly negative. Arguably the biggest driver of higher asset prices – loose monetary policy - is not only ending, but shifting into reverse. The economy appears to be weakening even as the Fed raises rates, but high inflation will keep the pressure on the Fed to keep rates higher.
Some of the highest flyers that led the market up and that had the most of their value far off in the future (by virtue of little to no earnings today) have been leading the way down. Rising housing costs, rising fuel prices, rising food prices and potentially less opportunity to use one’s house as a source of debt capital if home prices quit rising will pressure other consumer spending and investment flows
What is an investor to do in a very richly valued market with low but rising interest rates and high uncertainty? As always, be careful and have a plan. Make sure you are diversified, and know why you own what you own.
While predicting the direction of the economy looks hard here, analysts are clearly optimistic about corporate earnings, foreseeing strong profit growth for the foreseeable future. Investors are willing to place rich multiples on these rosy projections, driving the market to extremely high levels when using historical metrics (trailing EPS, book value, size of the economy, replacement cost, etc). This market has been driven on easy money and speculation, but there are signs the speculative fervor is starting to cool. “Buying the dip” has been a profitable strategy since 2009, so this slight decline could be ephemeral. This strategy does not always work, however - sometimes the supposed dip is just the first part of a major plunge. It is impossible to confidently predict when that will happen, but the conditions are in place. Investors are wise to be cautious.