A lot of our clients want to know what is meant by the term parabolic rise in a stock price.
A parabolic rise is best shown by this illustration. You get a stock that’s basing, the price just stays stable, goes up and down a little bit, and then some news comes out and “boom” it shoots up like a rocket ship.
We’re seeing that right now with a lot of the semiconductor chip stocks.
OK what does that mean? Well one thing is with a parabolic rise, you never know when they’re going to end. They can go up a lot more than you think, that’s possible. But generally they all end the same. They go high and then they sell off and you want to be the person that buys here and sells here not the person that waits to buy when things are going up parabolically. If you do that, you’re making the profits for those people that bought here so be careful with parabolic rises.
What do you think of the new fed chairman?
I think Kevin Warsh is one of the better selections that could have been made. I know there’s a lot of politics involved right now but this guy’s got experience he’s smart he’s solid from everything that I read.
I’m happy he’s the Fed chairman. I think one of the problems is going to run into is Jay Powell the ex-fed chairman stayed on the board and you know this is a human dynamic thing. There’s a possibility that the ex-boss may not be as happy with the new boss. And vice versa.
We’ll see hopefully they get along and they do what’s right for the country.
One thing I’m surprised about is that confirmation vote was almost along party lines. I mean you know this is something that shouldn’t be partisan issue. Whether you’re a Democrat or Republican you should want somebody good that’s going to take care of the country. I think Kevin Warsh is the right person.
What do I think is going to happen with inflation?
I think inflation is going to stay up. The Fed has a mandate to try to bring inflation down to 2% but I don’t see that happening. Oil prices have just really skyrocketed and what that does is it increases energy costs, transportation costs, materials costs, financing costs, warehousing costs, and manufacturing costs; Energy is embedded with everything we do and if oil prices jumped that much I don’t see how inflation is going to be coming down anytime soon.
I think inflation is going to stay sticky so keep that in mind. And how does the fed fight inflation? They raise interest rates. Have you noticed interest rates have been going up?
Who is going to control the House of Representatives after the midterms.
That’s an easy one, I don’t know!
What’s funny is I would expect that with Congress having a 14% approval rating there will be some changes and I think that that’s not a bad idea. Historically the party in power loses positions in the house and maybe even the Senate. I think this year’s probably not going to be any different especially if we’re still involved in war and if the inflation numbers are high.
Last question: There’s an old saying “Sell in May and go away” is that going to happen this year?
Again, we’ll look back and say hey we should have sold now. I don’t believe in that indicator or adage.
My mindset is going into this year, going into the war, you have a good portfolio, a solid portfolio that’s not tied to any benchmark because benchmarks don’t really mean anything to you.
You just want to make sure that your investment portfolio is aligned with your objectives and your goals to allow you to be able to maintain your lifestyle.
So when you hear these adages, take it with a grain of salt. Sometimes they work and sometimes they don’t, but a well-diversified portfolio tends to work more often than not.
Anyway, that’s all I have if you have any questions you want to discuss, call me I’m here.
Have a happy upcoming summer and until next time, I’m Phil Albitz, thanks for watching.
