I think as we going into another earnings season with uncertainty around interest rates, inflation and Omicron dampening the economy, stocks will react with more volatility than usual and possibly without making any sense. Sentiment is playing a large role in the stock market regardless of the fundamentals.

I did some stock nibbling on dips around Thanksgiving and Christmas but have held off this round so far. I’m looking at small caps, I believe they can be the biggest winners in the 2nd half of the year if expectations are correct and inflation declines. Valuations are coming down enough to look like very safe bets even if takes 12 months to fully appreciate.

The S&P 600 is well below it’s 5 year average forward P/E and is getting close to P/E support of 15X which has been where buyers have historically jumped in. A simple index ETF trade.

Given the depressed valuations on higher risk assets (like small cap) and that interest rates are still on the rise I’m not sure the scare is fully flushed out. While most predictions say inflation should start declining in Q1 and possibly hit somewhat normal levels of 3% the 2nd half of the year. I don’t see the mass money migration reflect those predictions just yet. Inflation protection bonds prices are still being pushed lower, meaning yields higher….(read more)

HOW TO: Hedge Against Inflation

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

The fourth quarter earnings season is here, and with it comes a wave of uncertainty and concern surrounding inflation fears. As companies report their financial results for the last quarter of the year, investors are closely watching to see how rising inflation levels may impact their bottom line.

Inflation, or the rate at which prices for goods and services increase over time, has been a hot topic in recent months. The global economy has seen a surge in inflation as a result of supply chain disruptions, rising energy costs, and increased demand for goods post-pandemic. This has prompted concerns that companies may struggle to maintain profitability as costs rise and consumer spending patterns shift.

For investors, the fear of inflation can have a direct impact on their investment decisions during earnings season. Companies that are able to successfully navigate inflationary pressures and maintain strong earnings growth are likely to be viewed favorably by the market. On the other hand, companies that struggle to manage rising costs may see their stock prices fall as investors seek out more stable investments.

During earnings season, investors will be paying close attention to how companies are addressing inflation concerns in their financial reports and earnings calls. Are companies able to pass on increased costs to consumers through price hikes? Are they able to manage supply chain disruptions and keep production costs in check? These are all key factors that can influence a company’s overall performance and outlook.

As inflation fears continue to loom large, some investors may choose to shift their focus towards sectors that are less sensitive to rising prices, such as technology or healthcare. These sectors tend to have more pricing power and may be better equipped to weather inflationary pressures.

In summary, the fourth quarter earnings season brings with it a heightened sense of uncertainty as investors grapple with inflation fears. Companies that are able to demonstrate resilience in the face of rising costs are likely to outperform their peers and attract investor interest. As earnings reports roll in, investors will be closely watching to see how companies are managing inflation risks and positioning themselves for future growth.