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In the second part of July, and in the first half of August there has been a good reaction on markets, both on stocks and bonds. On the other side, the second half of August has been much different, especially after the speech of Powell: he affirmed that the Fed is ready to use every instrument to reduce the inflation, even if it will reduce the growth.
Markets reacted in a very bad way: stocks went down and yields up.
Indeed now the S&P 500 is again below 4,000 and the 10-Year Treasury yield is above 3.2%.
In the last portfolio update I wrote that the market bounce could have been temporary, and I was right: there are still many uncertainties, and the pain may last for a while. That’s why I recommend to remain cautious.
We are here to build a portfolio for the long term. Temporary pain is absolutely normal.
BALANCED PORTFOLIO
Let’s start with the balanced portfolio.