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Monday Money Report

| August 08, 2022

The market continued its positive streak last week, despite a drop on Friday.  More than 80% of S&P 500 companies have reported earnings, and the results were largely positive.[1]  In fact, the S&P 500 is up over 10% since July 14th as earnings have been higher than expected and third quarter estimates for earnings growth have nearly doubled.[2]

Supply chain disruptions and logistics have continued to impact manufacturing.  While this is troublesome in the short run, many companies are using this as an opportunity to rethink and redesign their supply chain, which could be beneficial in the long run. We’re also seeing shoppers alter purchasing patterns as they continued to be squeezed at the gas pump and the grocery store.

Friday’s decline in the market was actually a result of what would normally be considered good news.  The jobs report was good, with both job growth and wages significantly higher than projections.[3]   Investors had expected that inflation will fall in the future, and Fed will have to reduce interest rates, or at least not continue the aggressive pattern of hikes.  Instead, with a strong job market, the Fed has room to continue increasing rates, and there is fear of another 0.75% rate hike in September.

The big question is, what do you do with this information? If you are unhappy at work, or looking to take the next step up the ladder, now is the time to look for something else, while jobs are still plentiful.  Some companies have rescinded offers, however; be certain you have a position before resigning.  

Continue to pay down variable interest rate debts, like credit cards and lines of credit.

The recent upswing may not continue, so dollar cost averaging can be a smart move for investments.  That’s when you make systematic purchases on a set schedule.  This can be as simple as investing in your 401(k), TSP, or IRA – with every paycheck or monthly contribution, you are dollar-cost averaging.  If you have a large amount of cash sitting on the sidelines, you can move it into an investment account, and make purchases over time. When you do this, you are buying more shares when prices are low, and fewer when prices are high. The math works out that your average price per share purchased will be less than the average stock price over the same period. 

Your action item this week is to check your student loans, if you have them.  The federal government has made it easier for loans to be forgiven under several circumstances, including the Public-Service Loan Forgiveness program or disability of the borrower.  They have expanded the number and types of loans that can be forgiven. There is an October deadline for some of these, so don’t wait.

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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.

[1] Market Watch, 5 Things We’ve Learned from Earnings Season, Tomi Kilgore, Emily Bary, and Ciara Linnane 08/05/2022

[2] Market Watch, 5 Things We’ve Learned from Earnings Season, Tomi Kilgore, Emily Bary, and Ciara Linnane 08/05/2022

[3] Wall Street Journal, Jobs Data Threatens Wall Street’s Recession Trade, Gunhan Banjeri and Sam Goldfarb, 08/05/2022