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The US stock markets experienced a sell-off as investors tempered their expectations ahead of Federal Reserve (Fed) Chair Jerome Powell’s upcoming speech at Jackson Hole.

There are indications that Powell may not support significant rate cuts as there is currently no substantial economic slowdown or crisis. Other Fed members also seem to lean towards a more conservative approach. The US 2-year yield rebounded to 4%, the 10-year yield settled near 3.85%, and the US dollar index recovered from its lowest levels since December. Major US indices, including the S&P500, Nasdaq 100, and Russell 2000, all showed declines.

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Today, global financial markets are tensely awaiting the speech of Jerome Powell, Chairman of the Federal Reserve, at the annual Jackson Hole symposium. This event is crucial as it can significantly influence expectations regarding future monetary policies, especially concerning interest rates.

Recent revisions in payroll data and the minutes from the latest Federal Reserve meeting have increased speculation that the Fed might adopt a more flexible approach to its monetary policy. With a slowdown in job creation and inflation appearing to be under control, analysts are beginning to see a more aggressive rate-cutting cycle as increasingly likely.

Market Expectations

The futures market already reflects a potential reduction of up to 100 basis points in interest rates before the end of the year. This outlook suggests that the Federal Reserve might act to ease financial conditions to support an economy showing signs of weakening.

Implications for Investors: The possibility of a rate cut has several important implications:

1. Fixed Income: A lower-rate environment is typically favorable for bonds, especially long-term ones, as their prices rise when rates fall.

2. Equities: Sectors such as technology and real estate could benefit from lower interest rates, as they reduce financing costs and improve asset valuations.

3. Currencies: A rate reduction could weaken the dollar against other currencies, as interest rate differentials would be less favorable for the U.S. currency.

Remember, investing is a journey, not a sprint. While August and September may present challenges, they're also rife with opportunities for those willing to do their homework. Keep your eyes on the horizon, stay informed, and never stop learning.

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IWA PORTFOLIO

The Market Panic of August 5, 2024

🟢 +172.65%

On August 5, 2024, one of the most panic-stricken days hit the financial markets in recent years. We are all familiar with the events that triggered this widespread fear and the subsequent chain reaction.

🟢🟢 Made on that day and reflection:

• Nvidia: +24.85% ✅

• Meta: +15.99% ✅

• Amazon: +13.46% ✅

• Apple: +10.42% ✅

• Booking: +10.76% ✅

• Microsoft: +7.46% ✅

• Google: +3.85% ✅

I wanted to share with you the purchases I made that day. In hindsight, it might seem opportunistic since these acquisitions are now profitable, showing remarkable returns in a short period.

However, the most relevant aspect here is the approach I adopted that day. It wasn't just about taking advantage of the market downturn, but rather a strategy focused on acquiring high-quality businesses at heavily discounted prices. The most valuable opportunities arise in moments of extreme panic, such as the one we experienced that day.

What matters is not whether those positions would be in the red or green today but that good businesses were bought with 15% to 20% discounts due to market irrationality. These kinds of opportunities are rare; when they arise, they are the essence of successful long-term investing.

Today, we hold 15 stocks for the Quality Growth Stocks Portfolio. As a Premium member, you can access them.

Investing in good businesses at a discount and maintaining a long-term vision is undoubtedly one of the best strategies for building wealth over time.

The IWA Portfolio is only available to Premium Subscribers.

IWA Quality Growth Stocks Portfolio

Return YTD 21.09% ➡️ 22.20%

Return 2Y 83.18% ➡️ 84.86%

Profitable Weeks 55.36%

IWA Quality ETF Portfolio

It’s one of the newest portfolios, having just celebrated its first anniversary. We are pleased with its progress, as it's safe, reliable, and stable.

Return YTD 18.65% ➡️ 18.79%

Return 2Y 53.28% ➡️ 53.47%

Profitable Weeks 60.71%

IWA High Dividend Portfolio

I am immensely proud of my holdings, which have grown from a small investment into a strong portfolio of 40 reliable stocks spanning stable industries, focusing on quality dividend growth.

Return YTD 11.66% ➡️ 12.41%

Return 2Y 15.73% ➡️ 16.51%

Profitable Weeks 57.14%

Portfolio Indicated Dividend Yield 2.66%

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Remember: Investing is a journey, not a destination. It's about making informed decisions, managing risk, and staying committed to your long-term goals. So, take the time to research, experiment, and find the perfect recipe for your balanced portfolio.

Cheers to wealth, wisdom, and a dash of madness!

The Investing Wise Academy Team

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Please consult with a financial advisor before making any investment decisions.