“Chance favors only the prepared mind” — Louis Pasteur

In this time of uncomfortable news and misinterpretation, we thought we’d share some good news…

1. Gasoline prices. First quarter drilling rig counts are up 14+% for oil rigs and 35+% for natural gas rigs. This is the first stage of increasing supply which will lower prices. The best solution for higher prices is higher prices.
2. Corporations are being successful, and we all benefit by their paying 22+% more federal taxes last year. Profit margins are the highest in history.
3. In the eight military confrontations starting with Pearl Harbor, one year later in all cases the stock market was up. This list includes the 2014 Russian attack on Ukraine. There were thirty-two wars since 1926. $100 invested in the market then would be worth $1,300,000 before taxes, today.
4. Inflation. There were thirteen prior Federal Reserve interest rate periods. In all cases the stock market was higher one year after the first hike.
5. Available cash. Money Market funds and Bank deposits are both at record highs. Liquidity is a bullish factor.
6. Shipping. The ship unloading issues are being addressed by improvements on both coasts.
7. Recession. The higher polls and publicity about a pending recession is a buy signal for the stock market. The saying goes “BULL MARKETS CLIMB A WALL OF WORRY.”
8. Leading Economic Indicators. In the fifty-plus years that we have had this indicator, there has never been a recession due to wars or economics when the indicator is positive. The indicator is not only positive but at all-time highs.
9. Market Declines. From 1928 to date there has been an average decline of 16.3% annually. During that period there has also been a 10% compounded growth in the stock market total returns.
10. Bearish opinion is at elevated levels. Another bullish indicator.
11. Employment. New and continuing unemployment are at record low rates. Good for workers, and investors. Even good for companies. Higher wages but offset by more customers.
12. Share Reductions. Stock buybacks are at record elevated levels. Sometimes exaggeration helps in understanding the truth. If ninety percent of the stock were repurchased by companies, what would you expect the remaining shares’ prices to do? All the complaints about share reduction fall into the false news category. Most are based on the premise that sellers do not spend or reinvest their proceeds. The proceeds disappear.
13. Value & Growth. We are value investors. Our motto is growth at an unreasonably low value. We have never had a chance to buy companies’ stock at such unreasonably low prices. Also, our strategy’s growth projection for the buy list has never been higher.

Major crashes occur when everyone is bullish and therefore there are no buyers left. That is not the case now.

Katz Family Financial