Click on here to read Astoria’s fourth quarter investment outlook
- The following quote refers to an old Wall Street adage: “The stock market stops panicking when central banks start panicking.” The Fed seems to be panicking in recent months, and we think it made a mistake at its September meeting. Most of the forward-looking inflation indicators Astoria monitors are down, and some quite rapidly. Aggressive hiking as the economy slows is rare. Generally, monetary policy becomes tighter when the economy is expanding.
- Astoria believes we may be close to the end of this tightening cycle. Will inflation remain structurally higher and longer? Sure, but we think we’re 75% through this market downturn. When the Fed panics, it usually means we are close to the end of the market downturn.
- Remember that as markets correct, valuations improve and expected forward returns become more attractive. It makes sense to be more optimistic when the market is falling, but many market experts preach the opposite.
- In conclusion, Astoria prefers dividend payers, value over growth, quality defensive stocks, and we are finally warming up to bonds after years of avoiding the asset class. We are starting to buy laddered US Treasuries, IG credit and munis, all short-term paper. As always, we continue to advocate the inclusion of alternatives and factor diversification.
Astoria Portfolio Advisors
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