November 2023 Watchlist: Entry Points

Market Overview

Welcome back to The Wealth Catchers' watchlist. October was once again a negative month for us as investors. It seems as though we've been stuck in this downward spiral these past few months. All the major indices were down and we saw some big pullbacks in some top names like Google, Netflix, Tesla, Costco, etc. This definitely made an already dark road even gloomier. But there could be a glimmer of hope. I know this watchlist is a few days late, but November has started with a nice run to the upside. Historically, November and December tend to be positive months and benefit from a Christmas or holiday rally. Now, this influx into the market can be viewed as a relief, especially for those who kept seeing red in their portfolios. But the biggest thing to take away from these rough few months is to really take into account how you handled this downturn. And what will you do if this is a dead cat bounce and the Christmas rally doesn't take full effect?

Fed & Monetary Policy

Plenty of investors took this opportunity to buy these stocks when no one wanted them and got them at a great value. Other investors took into account the high interest rate environment we are in and chose to allocate some money towards T-Bills, which are giving around 5% yields, risk-free. And others are still dollar cost averaging each month into the market. And some simply went with a high-yield savings account that has a 5% APY. The main point is, do you know what your plan is and the options made available to you? This negative economic situation we are in is far from over. Interest rates are not going to be cut anytime soon, and there are still expectations for one more rate hike. Unemployment is slowly ticking up, but not to the point where the Fed wants it. And we are still far away from the Fed's mandated 2% inflation rate that they want to achieve. We also have a large geopolitical issue at hand that is gut-wrenching to see and hear about. Also, presidential elections are a year from now. When you combine all of these factors, it's safe to say that the investing landscape is well placed in an area of uncertainty. And the market hates uncertainty. The next potential rake hike is slated for December 13th (my birthday, what a coincidence). According to the FedWatch Tool, there is a 90% chance that rates will remain unchanged. If these happen, expect another push to the upside. Also, pay attention to Powell's commentary about rate hikes; per the last meeting, rate cuts are still off the table. Once that commentary changes to something along the lines of "We're thinking about it" or "There are plans to do one or some in 2024," we get something along those lines that is another bullish indicator for the market. There's strong speculation, according to the FedWatch Tool, that cuts may begin in May or June 2024

Monthly Performance

At the close of the month, here are how the indices performed:Dow Jones (-1.14%)S&P 500 (-2.21%)NASDAQ (-3.43%)Russell 2000 (-5.38%)At the close of the month of October, the VIX was at 18.14. At the close of the month, the "Fear and Greed" index was at 31, indicating fear in the market.

Closing Note

I appreciate you checking in during this pullback, and here's your friendly reminder:

“The time to buy is when there's blood in the streets.”

Keep on buying assets; there's always a bull or bear market somewhere. Keep your money working.