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Covid Omicron In Rear View Mirror: Will We Be So Lucky With Fed Policy?

Bill Kort profile picture
Bill Kort


  • “Think the Fed’s already tightening? Not so fast.” (Barron’s).
  • As Omicron fades into the dust as a market disrupter, inflation and interest rates will return as the the preeminent negative market obsessions. This should not be a deal breaker for the market.
  • Thoughts on 2021 and 2022.

FED strategy of interest rate hike, United States of America financial or economics concept, jigsaw or puzzle reveals US Federal Reserve emblem on US dollar bill

Nuthawut Somsuk/iStock via Getty Images

“Think the Federal Reserve is already tightening? Not so fast”

My sub-heading above is the title of an article published in Barron’s Up and Down Wall Street column last weekend. You will need a WSJ

This article was written by

Bill Kort profile picture
Fifty-plus years common stock investing experience. Worked forty-two years on the sell side in institutional equity sales positions with Kidder, Peabody, A. G. Edwards and Wells Fargo. My goal with Kortsessions.com is to provide a rational and a balanced counterpoint to what seems to be a constant barrage of media hype and misinformation on the markets.

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Comments (12)

mysonchino profile picture
Thanks Bill, I always enjoy your realistic common sense articles. I especially liked the title of this one. I my opinion this is the last hurrah for COVID. People are tired of it, "experts" have lost credibility (rightly and wrongly) logic is starting to prevail and Washington has to spin a more positive "immediate" narrative if they want to stay in power. This is already happening. I see a positive article or two every day re COVID. One day soon, within 2 or 3 months or so the dam will burst and it will be declared over.

The stock market already senses this but si many are skeptical that it bodes well for the market. Take big tech out of the indexes and we are not nearly as overvalued as many headlines scream.

I look for a year with total return in the 10-12% range. I just calculated my 2021 return and it was the best ever on a % basis. (37.11%). If I get 1/3 of that in 2022 I will be estatic. 60/40 chance. But a correction could also occur.

I'm a long term investor and realize the excess returns I make one decade will be off set in the next. As long as I attempt to live a couple more decades it doesn't matter what happens year by year. But it's always fun to have a great year like this one.

Have a great new your and keep writing. Mush enjoyed.
Bill Kort profile picture
@mysonchino thank you so much for your kind comments. I think you are spot on with regards to Covid fatigue. Regardless of when the virus makes its final exit as a lethal obsession, its days as a market killer are over. Meanwhile, I will continue to write. Putting it down in print really helps me in my own thinking.

bluescorpion0 profile picture
the Fed and the economy is a delusion. as long as you are aware there is no solid foundation to this illusion all will be fine
Bill Kort profile picture
@scorpion.north thanks for checking in. These guys have got me hook, line and sinker. I have been completely fooled by the illusion/delusion since I started posting back in 2013. They are amazing.

cemanuel profile picture
Thank you for the article. I don't see much reason for doom and gloom myself. The economy is expanding and while inflation will be with us for a bit, a lot of it is "good" inflation due to wage growth. When lower earners earn more, it generally goes right back into the economy.

I think flat to 10% up for 2022 is likely and we may finally get a 10% correction which would be nice, just to remind folks that it can still happen. Earnings should continue to improve though and so long as this happens I just see no reason for any kind of sustained drop. I would like to see valuations come more in line with historical levels.

I'll also be interested in this: A CNBC poll published in August wrote, "A quarter (26%) of the general public began investing in 2020 and later (73% of investors began investing before 2019)." www.surveymonkey.com/...

If/when the market gets a little twitchy or has a pullback; will these folks stay in or decide they had a nice run and pull money out? Hopefully they are looking at things for the long-term.

This response: "New investors began investing to plan for the future (35%), because friends and family encouraged them to (19%), they recently learned how to (16%), due to extra money from the pandemic (10%), and the growth of cryptocurrency (10%).." implies that 35% are thinking long-term. The other 65%? We shall see.

Have to say the 10% crypto is a bit troubling - fine for folks with experience but I'm not sure it's the first place people should go to invest.
Bill Kort profile picture
@cemanuel thanks for your comment. I think a correction would certainly be positive. It would certainly be normal. Finally, it might shake out weak holders. I’m not certain about how much that moneychimp survey means as it does not cover the many general public investors who have held stocks for years. I would agree though there are enough newbies, weak hand, investors in the market today to provide us with a significant drawdown. Areas that might be particularly vulnerable would be a lot of the innovators stocks with no earnings and meme stocks like GME. As I pointed out in the article, I really do believe there are a lot of really interesting names in small cap, mid cap growth/value. Essentially I see the bifurcated market of the last few years going the other way with all of the have Nots performing very well.

cemanuel profile picture
@Bill Kort I should have mentioned the obvious that this 26% will represent a pretty small proportion of money in the markets. There may be the odd person here or there who put 7 figures in but 4-5 is likely the norm. I don't think what they'll do will move the market all that much. I'm just hoping they don't get scared off by some volatility.
Bill Kort profile picture
@cemanuel thanks for the clarification. My sense is that the newbies will be scared off. They will either learn from their experience and come back poorer but wiser or they will shun the market until the peak of the next great secular bull where they will make the top.
@Bill Kort Thanks for a good article. I suppose the answer to how the markets react to possibly reducing the balance sheet depends a lot on the time horizon and how it's shaped by the media. In the short term (1 yr is short term to me), the markets are apt to not like it and sell off. I'm not sure I believe the fed will actually do it though, so I'm sticking to a more fundamental approach to pick stocks.
Bill Kort profile picture
@hititdownthemiddle agreed the markets might not like the Fed’s time table. If past history is prologue the reverse of QE will be more moderate than Mr. Waller would like. Regardless of the path that they take when the dreaded taper starts there should be a fire storm of negative media. I would use that as a buying opportunity
Always appreciate your perspective Bill. Hope your 2022 is full of purpose and contentment.
Bill Kort profile picture
@TradeBot thank you ... what a great New Year’s sentiment!

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