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Sky is falling as interest rates rise

Happy New Year

The stock market is starting out the year as it will likely end…volatile and profitable.

Today there was a continued sell off in the Market as the 10 Year Treasury rose above 1.8%.  I’m not sure why rising interest rates are such a surprise to anyone. 

Despite the volatility, quality companies are extremely profitable and therefore I think the S&P 500 will end the year up, perhaps by as much as 10%.  So, yet again, I see this pullback as a buying opportunity.

For more of an explanation, yesterday I released a podcast discussing how S&P 500 valuations are still more favorable than bonds at 4%.  You can listen to it here:  https://www.wealthsteading.com/351

And today I release a podcast discussing valuations of QUALITY stocks and specifically referenced Goldman Sachs.  It’s available here:  https://www.wealthsteading.com/352

Don’t confuse my optimism with “catching a falling knife”.  I’m not condoning widespread purchasing of everything that’s down.  I think that meme type stocks, the no profit stocks, and the stay-at-home one trick pony stocks have much further to fall.  Investors are rotating out of high risk unprofitable stocks and into quality companies with reasonable valuations.

As always, invest with caution.

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