To The Moon

The Federal Reserve has decreased interest rates by 50 basis points, marking their first rate cut since March 2020. The long-anticipated Fed pivot has officially begun. By initiating their monetary policy easing cycle with a substantial 50 basis point reduction, it appears the FED has chosen to prioritize the labor market aspect of their dual mandate over inflation.Here’s a summary of the FED's decision:1. The Fed cuts interest rates by 50 bps for the first time since 2020.2. The Fed anticipates two additional 25 basis point cuts in 2024.3. Fed Governor Miki Bowman dissented, advocating for a smaller 25 bps cut, marking the first governor dissent since 2005.4. The Fed has gained "greater confidence" that inflation is trending towards 2%.5. The Fed will "carefully assess incoming data" and

The art of successful investing lies in finding the right balance between fundamental and technical analysis. While each approach offers unique insights, their combined application can significantly enhance investment decision-making.Fundamental analysis focuses on the underlying economic factors that influence a company's value. This involves assessing a company's financial statements, industry trends, competitive landscape, management quality, and overall economic conditions. By understanding these factors, investors can evaluate a company's intrinsic worth and determine whether its stock price is overvalued or undervalued.Technical analysis, on the other hand, focuses on studying historical price data and market trends to identify patterns and potential future price movements. This invo

Earlier this year I wrote a series of educational notes on using valuation signals to help navigate market cycles, and after a couple of conversations and comments I got to wondering what it would look like if you showed the average path the stock market took around valuation-extreme tops and bottoms.As a point of clarity, first I want to compare and contrast two market peaks.The August 2000 peak was a classic valuation-extreme top, a bubble; clear excess and extreme expensive valuations… just waiting to be popped (by rising interest rates).The October 2007 peak by contrast was *not* a valuation-extreme top. Across a number of valuation metrics the market looked reasonable, even cheap e.g. on a forward PE basis. Instead, that peak was the product of rising rates triggering an economic down