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We hope you find the articles on our blog informative and helpful. You are always welcome to chat with us if you have any questions about your personal financial situation.

Markets are on Edge. Are you?

The markets are on edge. The Fed has signalled it will use its tool box to curb inflation which includes raising rates and tapering. The market has shuddered. "Don't fight the Fed"! is the prevailing market wisdom. The market pundits and the news media are pronouncing that rising rates combined with less liquidity is going to be bad for stocks and that this could be the end of the historic bull market.

First of all, this movie has played out before. Between late 2016 and 2018 the Fed started to signal it was going to raise rates and high growth stocks sold off as they are the most rate-senstitive. Investors rotated into defensive stocks with strong earnings. However once rate hikes happened the same growth stocks that were now priced for those rate hikes, performed really well, while the defensive stocks did not. A good case can be made that we will see a repeat of the same pattern. Earnings remain robust, supply issues are likely to turn around in 2022 and inflation will eventually come down from it's current highs.

Likewise, the economy continues to find its way through the disruptions of COVID and while this may take more time than people think, we will move past COVID as the rest of the world begins to get vaccinated and build immunity. However, it would be foolish to discount new variants emerging over the coming 12 months - and more disruptions to global economies - while over 90% of the developing countries are still unvaccinated.

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2022 is Almost Here, So What's in Store for The Year Ahead?

We first want to wish all our readers and clients a Happy New Year!

As we say goodbye to a tumultous 2021, we look forward and to 2022 and what it may have in store for investors. 2021 saw inflation run away to heights not seen for decades. The Fed completely under-estimated this and shifted gears stating it was going to get serious about tackling inflation by tapering its bond buying and raising interest rates in 2022. The markets are re-calibrating. How big an issue is "inflation" and how soon can it be brought under control? These are the key questions as they will influence how aggressive the Fed is with respect to raising interest rates.

The key determining factors with respect to taming inflation are:

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Omicron and Inflation Set Off Market Concerns. How Valid Are They?

Omicron and Inflation are the boogeymen out to spoil the Holiday Season. Should you let them?

Markets are souring as news of record inflation numbers rebound across the globe alongside the emergence of a markedly different strain of the coronavirus out of South Africa. Wall Street is worried about the potential severity and impact of Omicron on the economy and how it may stall a potential recovery. The inflation concern is principally tied to worries regarding potential hikes in interest rates in 2022 and their impact on valuations and the stock market altogether.

These are real concerns. The question is how "real" and the answer to both of these issues is "unknown" at this juncture. The studies on Omicron and the efficacy of the various vaccines to thwart or limit it are still in process. Initial reports suggest that the impact of Omicron is less mild disease than the current Delta variants, but it is simply too early to tell if this is true. Markets are waiting for scientifically backed data and news.

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Bollinger Bands. What Are They and Can They Be a Useful Tool for Investment Decision Making?

What the heck are Bollinger Bands?

Bollinger Bands were developed by John Bollinger. They are envelopes (or could be thought of as sandwiches with the moving average of price as the filling) plotted at a standard deviation (which can be adjusted) above and below a simple moving average of the price. As the distance apart of the bands is based on standard deviation, the bands naturally adjust to swings in the underlying price being measured.

The width of the bands and underlying trend can be indicative of pending shifts in price. For example when the bands are narrow and remain narrow for a period of time which is indicative of a period of low volatility it can portend a more significant future price movement up or down which in turn would require other technical indicators to evaluate alongside it. The timeframe over which Bollinger Bands are observed or utilized is likewise an important factor to take into account and can also weaken or strengthen their validity or usefulness. If you are observing these over hourly, daily, weekly or monthly time frames they will yield different value.

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The Infrastructure Bill and Implications for The Clean Energy Sector

Some bad news for Democrats in Virginia prompted some much needed urgency and positive action on the legislative front and the resulting upgrading of America's deteriorating infrastructure. The "Build Back Better" or $1.2 Trillion Infrastructure Bill passed through Congress yesterday and is now waiting to be signed into law by the President.

$1.2 Trillion is a number that is hard for most mortals to comprehend. It is a gargantuan ammount of money, the largest sum ever dedicated to the revamping of America's infrastructure.

So, what are the implications of this massive investment program for american companies. Who stands to benefit the most?

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1600 South Main Street, Suite 190
Walnut Creek, CA 94596
Phone: 925-906-9800
Fax: 925-906-9884
info@hawleyadvisors.com

 

 

Hawley Advisors is an investment advisor, registered with the State of California. Any investment ideas or strategies on this website are for the purposes of education and general information only and should not be construed as specific investment advice. For more information about our firm please check the SEC Public Disclosure website: https://www.adviserinfo.sec.gov/

 

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