History & Stocks, Economic Data and More

The Prudent Speculator Weekly Commentary is expertly curated every week as a valuable resource for stock market news, investing tips, business insights, and economic trends as it relates to value stock investing. In this week’s Market Commentary, we discuss how volatility and weak data linger, but history, contrarian sentiment, and strong EPS growth suggest stocks remain on track for long-term gains. The full version of this commentary is available to subscribers, where we provide updates on four stocks across three sectors. Our entire list of recommended stocks is available to our community of loyal subscribers.

EXECUTIVE SUMMARY

Newsletter Trades – 1 Sell Across 4 Portfolios

Volatility – Ups and Downs but Long-Term Trend Has Been Higher

Sentiment – AAII Still Pessimistic…a Contrarian Buy Signal

Wall of Worry – Stocks Have Overcome Every Prior Disconcerting Event

Inflation – CPI Up, PPI Down

Econ News – Weaker Numbers, Solid GDP Growth the Forecast

History Lesson – Stocks Have Gained No Matter the Direction of Interest and Inflation Rates

EPS – Solid Growth Projected for 2025 & 2026

Stock News – Updates on Four Stocks Across Three Sectors

Market Review

Friday was not so grand, but the massive rally off the closing lows of April 8, 2025, continued last week, with the price rebound in the S&P 500 crossing the 32% mark on Thursday. Interestingly, while this is the 40th advance of 10% since the launch of The Prudent Speculator in March 1977, the magnitude of the gain is still some 8 percentage points below the average rally following one of the 39 corrections of 10% over that same time span.

To be sure, it would have been nice to have avoided those times in the red, not to mention the 106 setbacks of 5% over the last 30 years, but we have long believed that time in the market trumps market timing, and the kind of stocks that we have long favored have enjoyed very good average annualized returns over the long term,

…not to mention for nearly every period over the last two decades.

Of course, despite the overwhelming evidence that the only problem with market timing is getting the timing right, and that it pays to be greedy when others are fearful,…

…it is fascinating that the mood on Main Street has been pessimistic pretty much without exception since the Bear-Market bottom five months ago,…

…including in the latest Sentiment Survey from the American Association of Individual Investors, which should warm the hearts of those who shares our contrarian investing mindset.

To be sure, there is plenty about which to worry today, including the calendar as we are now two weeks into the statistically weak September-October time span,…

…but there are nearly always disconcerting headlines and stocks have usually climbed a proverbial wall of worry,…

…overcoming all scary selloffs and even Bear Markets in the fullness of time.

In the near term, all eyes are focused on this week’s Federal Open Market Committee meeting where Jerome H. Powell and Co. are widely expected to trim their target for the Fed Funds rate by 25 basis points, with the betting in the futures market suggesting there will be as many as two additional reductions in the benchmark lending rate by year end.

The Fed remains concerned about inflation as the Consumer Price Index (CPI) climbed 2.9% on a year-over-year basis in August, up from a 2.7% increase in July,…

…and the Core CPI (excludes volatile food and energy prices) rose 3.1%,…

…while long-term inflations expectations, per the Univ. of Michigan, jumped to 3.9%, up from 3.4% last month.

The CPI figures were in line with expectations, but the Producer Price Index (PPI) last month increased only 2.6%, well below estimates of a 3.3% gain,…

…so it would be a surprise for the Fed not to ease monetary policy this week, especially as first-time filings for unemployment benefits have ticked higher in recent weeks,…

…and the Univ. of Michigan’s preliminary reading on Consumer Sentiment for September was well below projections,…

…raising angst about the health of the economy, though the latest estimate for Q3 real (inflation-adjusted) GDP growth from the Atlanta Fed stood at a robust 3.1%.

Obviously, there is plenty of uncertainty about the Fed, but history shows that stocks have performed fine, on average, whether the Fed Funds rate is moving higher or lower,…

…and it has been a similar situation for equities whether inflation is rising or falling.

At the end of the day, what is most important for the prospects for stocks is corporate profits and the outlook for earnings today remains favorable for the balance of this year and 2026,…

…and we see no reason to not be enthused about the long-term potential of our broadly diversified portfolios of what we believe to be undervalued stocks,…

…as we offer the friendly reminder that while downside action is always part of the landscape, the odds remain decidedly in favor of the investor with a multi-year time horizon.

Stock News – Updates on seven stocks across four different sectors

Keeping in mind that all stocks are rated as a “Buy” until such time as they are a “Sell,” a listing of all current recommendations is available for download via the following link: https://theprudentspeculator.com/dashboard/. We also offer the reminder that any sales we make for our newsletter strategies are announced via our Sales Alerts. Jason Clark, Chris Quigley and Zack Tart take a look at earnings reports and other market-moving news of note out last week for more than a few of our recommendations.