“All the candy corn that was ever made was made in 1911.” Lewis Black

These are broad areas that have been getting stronger

1. Sugar
2. Software
3. Cyber Security
4. S. T-Bills

These are broad areas that have been getting weaker

1. Solar Energy
2. Lithium
3. Airlines
4. Utilities

Source: Dorsey Wright and Assoc./Thomson Reuters

(See complete List by clicking here:Monthly Trends)

It has been an interesting couple of months. In September we saw the Fed warn about heightened inflation risk. This helped interest rates on the 10 year U.S. Treasury increase from 4.09% to 4.57% and further moving up to 5.0%, so far in October. This rapid movement in bond yields has had a dramatic impact on the stock market. Basically, financial markets moved from an area of calm to an area of volatility. This has definitely garnered some attention. Another item that has garnered some attention has been the area of cyber security, which I have been watching for a number of years.

As you can see cyber security companies have risen to the list of “getting stronger.” This is one of the first times I have seen this industry rise up the ranks of strength. Of course, it got my curiosity going and I started doing some research in this area…looking at companies along with important “things to know.”

One of the important things to know about is passwords. We use them every day, but I found an article from the World Economic Forum (1) on password strength. This was pretty intriguing. They lined out how strong certain passwords are by how long it takes a bad actor (hacker) to figure them out. Here are some of the results based on password length and complexity:

6 characters – 5 lower case letters and 1 upper case letter – Instantly

8 characters – 7 lower case letters and 1 upper case letter – 22 minutes

8 characters – At least 1 upper case letter + 1 number + 1 symbol – 8 hours

10 characters – At least 1 upper case letter + 1 number + 1 symbol – 5 years

12 characters – At least 1 upper case letter + 1 number + 1 symbol – 34,000 years

In case you were wondering, that was not a typo. 34,000 years is the approximate hacking time it would take to guess your password. I find it fascinating how adding a few extra characters can make all the difference. Those hackers are crafty, so we have to stay one step (or 340 centuries) ahead of them.

As always, I enjoy interacting with you! Feel free to contact me with any thoughts and questions. You can email or call me…my phone is with me all the time. I look forward to speaking with you soon!

Michael

Michael S. Lewis

President, Wealth Manager

Anchor Wealth Management

358 NW 1^st Ave, Suite 2, Canby OR 97013

(503) 910-1687

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.anchorwealthmanage.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC (finra.org/sipc.org)

1. Buchholz, K. (2021, Dec 1) This chart shows how long it would take a computer to hack your exact password. World Economic Forum. www.weforum.org/agenda/2021/12/passwords-safety-cybercrime/

Content in this material is for general information only and not intended to provide specific advice or recommendation for any individual. All performance referenced is historical and is no guarantee of future results. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

“The most affectionate creature in the world is a wet dog.” Ambrose Bierce

These are broad areas that have been getting stronger

1. Greece
2. Homebuilding Companies
3. Mexico
4. Technology

These are broad areas that have been getting weaker

1. Wheat
2. Long Term U.S. Treasuries
3. Japanese Yen
4. Retail

Source: Dorsey Wright and Assoc./Thomson Reuters

(See complete List by clicking here: Monthly Trends)

We have been keeping a close eye on central bank activity, both here and abroad. Like we have said before, when inflation rises and stays high, it is our belief that it can create headwinds for both stocks and bonds. Conversely, when we see inflation go down, it can help create the needed tailwinds we tend to appreciate in the investment world.

At the June meeting, the Fed decided to pause (for now) and not raise interest rates. They might have been encouraged to see inflation come out at 4.00%, the day before. This is pretty huge because it was the June 2022 CPI number that took everyone’s breath away, when it hit 9.1%! Europe, however, did decide to raise rates 0.25% at their June meeting. This was appropriate because their inflation is still sitting at 6.1%. This is where we were in February of this year. So, they have a little catching up to do. Both are very encouraging because it is nice to see that inflation number getting better. It is apparent both central banks will not be done until 2% inflation is achieved.

Here's the interesting part with the recent inflation numbers. One of the biggest contributors to inflation going down, is the price of oil; it’s true. One year ago, oil was trading at $120 and today it trades at $70. That’s a decline of over 40%!

These are all encouraging signs for both the economy and investors. I am not sure we are done working through the inflationary issues yet, but we are headed in the right direction. In the meantime, I am keeping an eye out for $3.00 gas. Ah, I just remembered, it is summer….no hopes of seeing $3.00 gas until at least September!

As always, I enjoy interacting with you! Feel free to contact me with any thoughts and questions. You can email or call me…my phone is with me all the time. I look forward to speaking with you soon!

Michael

Michael S. Lewis

President, Wealth Manager

Anchor Wealth Management

358 NW 1^st Ave, Suite 2, Canby OR 97013

(503) 910-1687

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.anchorwealthmanage.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC (finra.org/sipc.org)

Sources:

• S. Bureau of Labor Statistics
• EuroStat

Content in this material is for general information only and not intended to provide specific advice or recommendation for any individual. All performance referenced is historical and is no guarantee of future results. All investing involves risk including loss of principal. No strategy assures success or protects against loss. Third party posts do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy and completeness.

“A computer once beat me at chess, but it was no match for me at kickboxing” Mitch Hedberg

These are broad areas that have been getting stronger

1. Oil Equipment
2. Homebuilders
3. Steel Companies
4. Seminconductors

These are broad areas that have been getting weaker

1. Japanese Yen
2. Utility Companies
3. Long Term Corporate Bonds
4. Biotechnology

Source: Dorsey Wright and Assoc./Thomson Reuters

(See complete List by clicking here: Market Trends)

Recently, I have had quite a few conversations about artificial intelligence or AI. It’s not surprising, since we see the term mentioned all over the news. Companies have also been talking about possibly using AI in their organizations. Because of all this, I thought it be helpful to walk through what it is.

The official term “artificial intelligence” was coined by John McCarthy. He was a mathematics professor at Dartmouth. He organized the Dartmouth Summer Research Project on Artificial Intelligence in 1956 (1). It was here that this field of research was born.

Experts have broken down the field of artificial intelligence into four main branches: (2)

1. Reactive Machines
2. Limited Memory
3. Theory of Mind
4. Self-Aware

Reactive Machines are basically machines that have no memory and are task specific. The same input will always create the same output. This is predictable because no variables exist. The popular example of this category is IBM’s Big Blue. It was a computer that was taught to play chess and beat Grand Master Garry Kasparov in the late 1990’s. This was one of the biggest accomplishments this branch had seen, and it took almost 50 years for it to occur.

The second branch, Limited Memory is where we are today. It is what has been in the news. This focuses on trying to imitate how the neurons in our brain work together. “…it gets smarter as it receives more data to train on.” (3) It attempts to operate like a child’s mind by learning in layers. For example, the child learns the alphabet and then learns to read. Later they learn to write. Likewise, the limited memory algorithm also learns basic image recognition first, then moves on to other types of patterned “reinforcement learning.”(3) This is called “Deep Learning” in the AI world. This is one of the main differences between reactive machines and limited memory. Reactive machines operate in a world of finite information, like the finite number of possible chess moves. Limited memory learns and operates in a world of new variable information.

Limited memory functions are searching the internet, which is constantly growing, for new and updated information. From there, it is using its ability to recognize patterns of information and chunks of patterns of information. Then the limited memory machine or algorithm is using probabilities to determine which patterns of information to use at a given time. This process is referred to as Generative AI. Right now, generative AI is being used to create content like, writing books, movie scripts, songs and art. Companies are also exploring ways to use this AI to streamline operations.

This field has really just come to the mainstream within the last 12-18 months. So, we are in the infancy stage of this field. In order for this field to grow it needs capital investment. I believe companies and organizations are going to need to spend large amounts of money strengthening their technology capabilities. In other words, they are “going to need a bigger boat.” And the main piece of this “bigger boat” is the engine. That engine in the technology world is the computer chip (i.e. semiconductors). From an investment perspective I believe this is an area to spend time researching. As you can see in the list of “areas getting stronger,” semiconductors is on the list.

You’ll remember I mentioned two more branches of AI….which we haven’t discussed yet. We don’t really need to put much time into them because, we are not there and experts don’t think we will get there soon. Some experts predict it could take centuries (4). The Theory of Mind, which is the understanding of another’s needs, which deals with sympathy and empathy and Self Aware, which deals with self awareness and self preservation.  Hopefully the experts are right and it takes centuries….my vote is “never!”

One last item….In case you were wondering. This article was not generated through AI. It was completely written by yours truly!

As always, I enjoy interacting with you! Feel free to contact me with any thoughts and questions. There is so much information out there and I would love to learn what you know as well! You can email or call me…my phone is with me all the time. I look forward to speaking with you soon!

Michael

Michael S. Lewis

President, Wealth Manager

Anchor Wealth Management

358 NW 1^st Ave, Suite 2, Canby OR 97013

(503) 910-1687

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.anchorwealthmanage.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC (finra.org/sipc.org)

1. Dartmouth University (Dartmouth.edu)
2. Joshi, Naveen – “7 Types of Artificial Intelligence” Forbes Magazine 6/19/2019
3. Coursera.com
4. Talty, Stephen – “What Will our Society Look Like When Artificial Intelligence is Everywhere?” Smithsonian Magazine, April 2018

Content in this material is for general information only and not intended to provide specific advice or recommendation for any individual. All performance referenced is historical and is no guarantee of future results. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

“The only thing better than one Golden Retriever is two more Golden Retrievers.” Anonymous

These are broad areas that have been getting stronger:

1. Ireland
2. France
3. Spain
4. Gold

These are broad areas that have been getting weaker:

1. Israel
2. Regional Banks
3. Real Estate
4. Retail Companies

Source: Dorsey Wright and Assoc./Thomson Reuters

(See complete List by clicking here:Monthly Trends)

As you can see, gold is on the “getting stronger” list. There are lots of ideas on why gold goes up and down. A common reason many people think is during periods of financial crises. While that may be partially true, historically, I don’t see it as a reason for big moves in this precious metal. During the financial crises of 2008 (Jan – Dec 2008), we only saw gold go up approximately 5.0%. Not much of a hedge when the S&P 500 went down approximately 35% that year.[i]

So, what does make gold move? In my research and experience, there are only two major reasons for moves in the price…deflation and inflation. Between these two, I believe inflation seems to be the biggest culprit. We saw this quite dramatically during the high inflation period of the late 70’s. In fact, from January 1979 to January of 1980, while inflation went up from 9.3% to 13.9%,[ii] gold had a monstrous move. The price moved up from $235.00 oz to $882.00 oz.[iii] A 275% return! That, my friend, is a big move. I have no idea if gold will ever move like that again, but it does give us some idea of what types of situations can have more of an impact.

Why is it moving now? Since, I believe inflation is historically the biggest reason, we can look at the U.S. and overseas, to get a fuller picture of inflation. In the U.S., our year over year inflation came in at 5.0% (March 2023).[iv] But, it looks bigger across the Atlantic. If we look at the 19 countries that use the euro, they have an average inflation of 6.9% during this same period (March 2023, year-over-year). However, the range is pretty vast. The country with the lowest inflation is Luxembourg at 2.9% but the euro country with the highest inflation is Latvia at 17.2%. Even Germany is at 7.8% and Sweden is showing inflation at 8.1%.[v]

With all this inflation being very high, I believe, it is the biggest contributor to the price of gold strengthening.   With gold sitting around $2,000, can it go higher? If global inflation is not reigned it by the various central bankers, it could be possible.

As always, I enjoy interacting with you! Feel free to contact me with any thoughts and questions. You can email or call me…my phone is with me all the time. I look forward to speaking with you soon!

Michael

Michael S. Lewis

President, Wealth Manager

Anchor Wealth Management

358 NW 1^st Ave, Suite 2, Canby OR 97013

(503) 910-1687

This email address is being protected from spambots. You need JavaScript enabled to view it.

www.anchorwealthmanage.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

i Thomson One

ii St. Louise Federal Reserve

iii Investing.com

iv Federal Reserve

v Eurostat

Content in this material is for general information only and not intended to provide specific advice or recommendation for any individual. All performance referenced is historical and is no guarantee of future results. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

[i] Thomson One

[ii] St. Louise Federal Reserve

[iii] Investing.com

[iv] Federal Reserve

[v] Eurostat