I hope this email finds you enjoying a wonderful weekend!

This past week, Congress passed a bill to suspend the debt ceiling, thus avoiding default through January 2025. On Friday, markets further rejoiced at a higher than anticipated unemployment rate, which implies a further decline in inflationary pressure and may solidify a softer Fed policy. This news, of course, comes on the heels of one of the strongest technology advances we’ve seen in over a decade, lighting a fire under anything in the AI space and beyond. The early strength we’ve seen in Tech spread on Friday, with the Dow adding almost 700 points, and the S&P 500 clearing some very important overhead levels. Optimism is certainly increasing, and the general mood on Wall Street seems to be changing by the minute.

While we’re pleased to see a further advance in equity prices, my goal today is not to cheerlead the tape but rather to take a moment to observe the psychological shift that is taking place rapidly. For months now, we have been discussing via videos as well as periodic emails our optimism in the face of general pessimism for a variety of reasons. While most saw an impending recession, we considered a consumer shift, and while others still felt a dramatic market drop was in the cards, we strongly believed there had never been so many solid opportunities. I commend those who stuck with us and stayed the course, not allowing emotions to rule the day.

While we’re not yet at the point of issuing any warning signs about this recent advance, what I want to observe is human psychology and watch how this all plays out in the coming weeks and months. While many may believe the market has only just now begun to improve, the fact of the matter is that stocks have been advancing since the fall of 2022. In fact, the last bottom in the S&P, which occurred in October of last year with a low of 3491, has now been on over a 7-month run, notching 22% off the lows. The tech-heavy NASDAQ, which bottomed at the very same time, has now advanced 31% off the lows. The point I’m trying to make is that while many will now begin to rejoice in the markets around the dinner table, seeking out new stocks or opportunities, it may be a time in the near future to become a bit more suspicious.

Now, just because people zig does not always mean we zag. On the contrary, I still believe the market has room to run and may surprise even the most hardened of bears. However, the easy trade, the one when everyone was bearish, moving money out of stocks into bonds or buying up precious metals for fear of the impending collapse, is well behind us. Going forward, it will be even more critical to be selective with precision and discipline.

Markets are still a long way from highs, and until these highs are breached, one cannot simply assume the bull is here to stay. What I do find encouraging is the new leadership taking shape and the themes I see playing out. It’s often said that bull markets build on skepticism and die on euphoria, and despite the strong moves we’ve seen in certain stocks or sectors, in my opinion, the general market participant is far from feeling or acting euphoric!

While it is nice to feel better about the markets, please remember this feeling the next time frustration sets in and stocks look downright ugly. Just when you think hope may be lost, it’s usually the best time to step up and buy or, at a minimum, simply stick with the plan.

On a housekeeping note, we’re busy at Joule this summer going through all client profiles with a desire to analyze and potentially accelerate Roth conversions. As many of you know, this is an excellent strategy we love to review for almost all of our clients, and I feel it’s important not to wait until the final few months of this year, as we have in the past.

We’ll be reaching out to you to discuss this further, so stay tuned!