Warm Blanket
I had never been “under”. That’s right, somehow I made it to 50 without ever having been put to sleep with medication. The closest I came was when I had that twilight stuff for a tooth implant. I tried to avoid it, but Father Time caught up to me. It was time for my 50 year old colon cancer screening.
I went to Vegas with my high school friends in early September. All of us turned 50 in the last year. Naturally we talked about the 50 year old colonoscopy. Dan swore by Cologuard, the at-home test that requires a sample, but no invasive cameras. Dr. Meyer, also on the trip, advised against, reminding me that any positive result from Cologuard and the real thing is required anyway. They all reassured me about the day of the procedure – “you’ll be fine, Kline. They will give you propofol and you won’t remember anything”. They kept telling me the prep was the worst.
But I knew that the needle and procedure prep would scare the crap out of me. I take a lot of grief from my daughters because when Corie got her IV for her toe surgery, I got queasy. Yeah, that really happened. They were prepping Corie for her surgery at Jewish Hospital. The nurse came in and started to prep Corie’s hand for the IV. Next thing I know, I’m white as a sheet and they are offering me apple juice. Talk about embarrassing.
Back to my procedure. The nurses at Good Sam were fantastic. I went there because all three of the girls were born there and my memories of those experiences were great. They didn’t disappoint. The nurses did everything they could to put me at ease. But still, I was nervous as hell. That is, until they brought out the warm blanket. They brought that blanket out and put it on me. Immediately I felt better. More relaxed. It took me back to a time when my mom would pull towels out of the dryer and drape them over us on the couch. There’s nothing like connecting an adult experience with a great childhood memory. The procedure went off without a hitch. Easy, breezy. Done and out of there. Even made it to coach basketball that evening. All made possible by putting my mind at ease with a warm blanket.
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November was good for the markets. The S&P 500, NASDAQ 100 and Dow were each up about 6%. Since my last article, the mid-terms ushered in what looks to be an era of gridlock. A Democrat in the White House with a Republican House usually means less legislation gets done. That is often a recipe for gains in the market.
However, there is a lot of uncertainty to that thesis. The macroeconomic conditions are confusing at best. Consumers continue to spend. And while inflation at the gas pump is gone for the time being, it’s rampant elsewhere. Witness the insatiable appetite fans have for Taylor Swift. She added multiple dates in each city (Cincinnati is up to two dates, Tampa three dates), and tickets are still very difficult to find. I wanted to see The Boss. Nosebleed seats in Columbus are $300 + fees. This is the “services inflation” the media talks about. And on the “goods” side, I bought basis furnace filters the other day for my rental property. $4. Those filters were $.85 not so long ago.
On the housing front, sales have ground quickly to a halt with new home sales down 25% and existing home sales down 27%, even while prices are up 6%:
Where does this leave us? Inflation is moderating, but still high. Housing is down, auto sales are down, corn, wheat and lumber are all down. But corn, wheat and lumber are all still higher than pre-Covid levels (see chart below). The Federal Reserve continues to raise interest rates, promising another .50% increase in December. If the economy isn’t in recession, the interest rate hikes will likely push us there by mid to late 2023.
As I’ve said before on these pages, the market will continue to chop around as long as inflation persists and interest rates are on the rise. Our response is to find investments that can weather this environment. Some examples include:
· US Treasuries. In particular, 3, 6 and 12 month Treasuries all currently provide 4+% returns. If held to maturity, the downside is almost non-existent. Treasuries are backed by the full faith and credit of the federal government, providing the same protection as bank CD’s without the $250,000 FDIC limit. Treasuries are also free from State and Local taxes.
· Dividend paying stocks. Dividend paying stocks cushion the blow of downside in the stock price and they tend to be more stable, profitable companies with positive cash flow. This includes both large and midcap companies.
· Health care. If there’s one thing that has continued unabated, it’s the inflation in health care costs and the pace of health care innovation. These trends drive stock prices. This sector is strong even in tough times.
If inflation moderates and the economy slows enough to justify a slowdown in rate hikes, or even a reduction in rates, the market may rise in response. However, it’s an uncertain time with downside risk matching upside potential. In this environment, we want to stay invested, but taking care in doing so. In summary, we are looking for those warm blankets to keep you comfortable and relaxed.
Have a great Holiday season. For those of you who will have us do your taxes, we will be in touch in the New Year.
Jared
What’s Your Financial Story?
Brian Kellett, brian@kellettschaffner.com. Phone 513-312-6067
Dave Bodnar, david@kellettschaffner.com. Phone 513-258-6973
Jared Kline, jared@kellettschaffner.com. Phone 513-768-2238
Kellett Schaffner Wealth Advisors LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Kellett Schaffner Wealth Advisors LLC and its representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Kellett Schaffner Wealth Advisors LLC unless a client service agreement is in place.