After Jerome Powell's speech yesterday, there is no doubt now that he is intent on further aggressive rate hikes until the persistent high inflation is under control.
He believes that it is the only way to control inflation and told the markets that there will be more pain ahead.
However it is a fine balancing act, like walking on a tight rope. The ghost of Paul Volcker may haunt Powell. Paul Volcker raised interest rates to as high as 20% and recession followed.
Currently there is Fear in the markets that recession is inevitable and will be coming soon on the back of high inflation. Perhaps recession is what is needed to reset the economy.
However this is a great opportunity to buy quality stocks at huge discounts. A good example is Alphabet which is currently down 30% in just 1 year and has gone below 100.00 just yesterday. This is a great company with phenomenal growth ahead, and ticks all the core fundamentals of a quality stock.
Markets always rebound after downturns. I would stay the course and continue to hold my stocks for the long haul. No matter what the economic cycles maybe, I believe that it is important to hold these quality stocks that will be resilient in good times and bad.
I am reminded of Warren Buffett who said that it is the business of the company that counts and not the economic cycles.
So I am prepared for more pain ahead but I look to the future with confidence and optimism knowing that it is time in the market that counts, and not timing the market.
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The current cost of goods seems to have its start in covid pandemic and made worse by Biden's war in Ukraine and tensions with China related to Taiwan. Other factors affecting food supply could be related to climate change and population growth.
Not sure if any of the above issues (covid, ukraine, taiwan, climate change, population increase) causing supply shortage and price increases can be solved by actions of a bank.