September was a rare down month for the stock market. Year-to-date the DJIA is up about 12%, the S & P 500 stock index is up about 15%, while most bond indices are negative for the year. But the stock market doesn’t feel healthy as we start the fourth quarter. Why? The high flying, popular growth stocks e.g., Apple, Amazon, Facebook have gone nowhere for the last few months, as have the “in vogue” renewable stocks e.g. First Solar. But the more boring financial and energy stocks have been soaring.
Investors are worried about the impending beginning of the Federal Reserve’s stated plans to begin raising interest rates from their historically record low rates, and the result that may have on our economic growth. This coincides with stock valuations being at elevated levels, and inflation rising noticeably. Still, with bond and money market yields unattractive, the TINA crowd (There Is No Alternative) makes their case for buying stocks.
Throw in the perennial congressional dysfunction regarding stimulus spending, federal debt extension, and we have the ingredients for a volatile stock market. In our last report we highlighted value in the bank and healthcare stocks, and they have performed well since then: Citigroup, Prudential, CVS Health, and Pfizer. We also suggested some energy renewable stocks which have not done well: Canadian Solar, Vestas Wind, and a speculative play – FTC Solar. True to our contrarian leanings we still like the renewables for long term growth, and many of the financials and healthcare stocks are not overvalued. We remain bearish on intermediate and long-term bonds and favor an above average cash position.
In this volatile environment please contact one of our friendly advisors for more information on any of the above-mentioned securities, or to have a no obligation portfolio check-up. Also consider using our popular portfolio management service, it may help you sleep better at night.
Prices and yields as of October 4, 2021. The above information is believed to be reliable but is not guaranteed to be accurate. Investors should check every investment for suitability for his or her needs. Stock investing is risky, and you could lose money. Of the above-mentioned securities, the author maintains personal positions in Citigroup, Prudential (PRU) CVS Health (CVS), Pfizer (PFE), First Solar (FSLR), Canadian Solar (CSIQ), FTC Solar, and Vestas Wind (VWDRY). First Georgetown Securities, Inc. will furnish available information supporting recommendations upon request.