Here’s my perspective on the CPI data and SPX hitting all-time highs.
I believe it's crucial not to base long-term market decisions on one month’s data, particularly when it comes to CPI. While the September core CPI came in slightly higher than expected at 3.3%, and the headline CPI at 2.4%, these figures, though higher than estimates, still represent a general trend of cooling inflation. The broader picture is still one of deceleration from peak inflation levels seen last year, despite the fluctuations.
When it comes to deciding whether to take profits or hold through year-end, it’s important to focus on the underlying investments in your portfolio rather than trying to time the market based on short-term indicators. While the SPX has hit record highs multiple times this year, chasing trends or predicting tops can often lead to missed opportunities or premature exits.
For instance, the market may still be pricing in a relatively stable macroeconomic environment, especially considering the Federal Reserve’s gradual approach to rate cuts and the mixed reaction to inflation numbers. Although inflation isn’t falling as quickly as some had hoped, the Federal Reserve appears to be cautious, keeping the door open for further adjustments.
Ultimately, my strategy leans towards focusing on the fundamentals of the investments I hold. If they continue to perform well and their outlook remains strong, I see no reason to exit simply because we’re at record highs. Timing the market based on CPI or other individual metrics, in my view, adds unnecessary risk. Holding through volatility, with an eye on long-term value, typically provides more consistent returns.
Therefore, I won’t be making a major judgment based on the latest CPI reading. Instead, I’ll keep evaluating my portfolio’s performance against the backdrop of broader market trends and fundamentals.
@TigerWire