• Current read is 55 on the fear greed index vs 65 last week.

• Market came down a few percent this week & brought the market back to the neutral category from greed. Healthy & normal!

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be cautious when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate increased to 6.56% Today, vs 6.41% last week.

• 10 year treasury bond yield increased to 4.73% Today, vs 4.68% last week

• 2 year treasury bond yield increased to 4.24% Today, vs 4.17% last week.

• Rates went up this week as investors demand a premium to take on the debt of the US government. Will cover more below in the “current thoughts” section.

• As I always say, interest rates are gravity!

• As interest rates/bond yields INCREASE, stocks become LESS attractive because bond yields go UP which makes the risk free bond look MORE attractive.

Hope everyone had a good week!

The stock market has been a little more volatile lately, and I think the first thing everybody needs to realize is that this is completely normal.

The NASDAQ is still up around 17% on the year and had a massive rally off the lows earlier this year. After a move like that, the market bouncing around and pulling back a few percent is not some crazy warning sign.

Markets do not go straight up.
Sometimes they simply need to take a breather.
That is ok!

The biggest thing I’m watching right now is whether the fundamentals underneath the market are still holding up, and overall, I think they are.

The economy looks okay. Labor market is still relatively healthy. Consumer spending is holding up. We are not seeing some massive wave of layoffs. Earnings growth continues to be very strong.

At the same time, valuations have actually improved.

The forward P/E ratio on the Nasdaq 100 has fallen below 22 while earnings have continued growing.
That is exactly what I want to see.

If stock prices move sideways while earnings continue going higher, stocks naturally become cheaper because you are paying less for each dollar of earnings.

That does not mean the market is dirt cheap right now.
I would call it somewhere around fair value.

Another HUGE thing I am watching is interest rates.

The 10 year Treasury yield has been pushing higher again, and that matters because higher long term yields increase borrowing costs throughout the economy.

Mortgages become more expensive. Companies pay more to borrow money. Investors also have more competition for where they want to put their money.

If somebody can earn a strong return owning bonds, stocks need to offer enough potential upside to compensate investors for taking additional risk.

That is why I continue watching the 10 year yield closely.

I do not think one specific number suddenly breaks the stock market on the 10 year bond yield. It is more like a thermometer.

The higher yields go, the more pressure it progressively puts on valuations and the economy.

The other side of this is the Federal Reserve.

The market is still debating whether we see additional interest rate hikes this year, but I continue to think the odds of aggressive hikes are relatively low.

The bond market has already tightened financial conditions quite a bit by pushing longer term yields higher.

Inflation is still above the Fed’s goal, but we are not wildly away from it either.

So overall, there are a lot of moving pieces right now.

And that is exactly why I think investors need to stop reacting to every single little move.

The market might drop tomorrow.
It might rally next week.
Nobody knows.

What I care about is where earnings are likely going over the next several years.

If corporate earnings continue compounding higher, I believe the market will eventually follow them higher.

It will just be extremely messy getting there.
That is the part investors struggle with.

Everybody wants the long term return without experiencing any of the short term volatility required to get there.

That does not exist.

One of the biggest mistakes I see people make is thinking they always need to do something.

Trade more. Change strategies. Buy something new. Sell something because it dropped.

Sometimes boring is good.

Warren Buffett did not become Warren Buffett because he made 500 trades every month.

He bought good businesses at reasonable prices, managed risk, stayed patient, and let time do the heavy lifting.

That is basically the mindset I want everybody to have right now.

There will be good weeks.
There will be bad weeks.
There will be scary headlines.

But if earnings continue growing, the economy remains reasonably healthy, valuations stay reasonable, and interest rates do not spiral out of control, I continue to believe the bigger opportunity is still ahead of us.

So for now, I’m staying patient, watching the fundamentals, and letting the market do what markets do.

There are SO many opportunities out there with stocks & options, the key is to allocate in a way that simply makes sense & think like an investor, not a gambling speculator like most.

I strongly believe the next few years in the market will make many people MILLIONS. The key is to filter out the noise & focus on the cream of the crop opportunities & be patient!

See you next week!
- Brandon

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