2022 YTD Damage Those of you with good memory, could please share how (Fed, fiscal, turn in business cycle, or simple exhaustion) we snapped out of the 2015/2016 correction / bear market?
Hmmm … Not to make too fine a point of it, but the S&P lost less than 1% in 201
5. It was preceded in 2014 by an 11% gain and followed in 2016 by a 9.
5% gain. There may have been a bear market in there somewhere, but I don’t remember it.
- 2007-2009 was one of the worst bear markets in history based on peak to trough. But one of the shortest based on duration.
- A more recent nasty stretch was in 2018 when the S&P lost 6.24% for the year, most of that in the 4th quarter.
- Than there was the first quarter of 2020 when we fell off a cliff. However, by year end markets had recovered.
Why we snapped out of recent bears or corrections I can’t answer. But I’d say your “Fed, fiscal, turn in business cycle, or simple exhaustion” are all somewhat correct. To pick just one, I’d guess the highly accommodative Fed was the single biggest contributor. Therein lies the problem today. With short term rates so low and inflation rising the Fed might not be able to ride to the rescue next time as it has in the recent (10-1
5 year) past.
S&P Performance By Year
2022 YTD Damage Those of you with good memory, could please share how (Fed, fiscal, turn in business cycle, or simple exhaustion) we snapped out of the 2015/2016 correction / bear market?
Forsyth’s in top form this week …. :) Plus - Recession Approaching & 70s Style Inflation … Excerpt:
“It was a lot more fun to be in your 20s in the ’70s than to be in your 70s in the ’20s. Not that I would know personally (yet), but this wry baby boomer lament, making its rounds on the internet, hits uncomfortably close to home. I don't actually associate the 1970s with fun, but rather prices running ahead of my paycheck, of queuing in gasoline lines on odd or even days, of not having enough cash for the items in my shopping cart, and of living in Brooklyn because it was cheap long before it was chic.”
Forsyth’s general tone is that various economic indicators are signaling an approaching recession. He also sees many parallels between today and the inflationary 70s.
Here’s a bit more substance …
“By the calculations of J.P. Morgan's global quantitative and derivatives team, led by Nikolaos Panigirtzoglou, the U.S. equity market has priced in a recession probability of 50%, while the investment-grade bond market has discounted a 43% probability of a recession. The high-yield (aka junk) bond market has priced a relatively small 17% probability of recession.”
“Up & Down Wall Street: Two Headed Monster - Recession Rumbles Get Louder as Impact Of Stimulus Fades” - by Randall W. Forsyth - Barron’s March14, 2022
Kyla Scanlon - Taking Some Sense to Make a Nickel I will bet a nickel that the energy costs to melt that nickel are now greater than the remaining 11.25 cents
My Commodities Basket got clobbered today - DBC Commodities will work until they don’t. Like equities, they are prone to boom and bust cycles. No way to predict how long this bull cycle will run. I looked at the James Stack charts / suggested allocations this morning to make sure I wasn’t wildly underexposed. Turns out I’m more or less in line with Stack’s view (though I can’t vouch for his abilities). In mid February he had 4% in materials, 4% in energy and
5% in gold.
Yes. We have inflation. Even during the inflation of the 70s and 80s there were boom and bust cycles in energy, gold and other commodities. It’s not an automatic
given they will always rise along with inflation. And, if your mutual fund manager is on the job, he / she should have exposure to commodity producing or selling companies or companies that stand to benefit from it. Some recent references on the board to John Deere being held in commodity or AG funds illustrate that point that a seemingly non-commodity company can in fact help hedge against commodity inflation.
I do wish I’d followed Stack’s recommendation to avoid fixed income and put 2
5% in cash. Looking back several weeks, that would have been the right move. I plan to subscribe to the 3-month trial when the new issue is released March 18 as I found the reading stimulating.
My
earlier link to free InvestTech offer
BTW -
@MikeM is spot on about needing to hedge your bets in these markets. Commodities / precious metals are but one of several approaches one can use. But that’s for another discussion.
European equities getting clocked today … Revisiting TRP Emerging Europe (TREMX) one week later finds the fund up around 1%, YTD -85.27% compared to -86.24%. AUM down to $23 million according to M* today. From what I recall last Saturday on the TRP website, AUM were something like $145 million +/-, but I'm not sure as of what date that was.
Kyla Scanlon - Taking Some Sense to Make a Nickel Barron's notes that 5c-nickel is now worth 16.25c, but also reminds that it is illegal to melt coins.
Only 3 Multi-Sector Income Mutual Funds Above Water YTD In this kind of market phase, anyone who thinks a drop of 5% 'stinks' has simply not been through enough rodeos. I would luuuuv it if my portfolio were down only 5%.
Kyla Scanlon - Taking Some Sense to Make a Nickel
2022 YTD Damage Is the McClellan Oscillator related to the oversold and overbought indicators provided by a MFO member 2 or 3 years ago? I seem to remember readings like 125 and 145 indicating the condition of the market.
Innovation in Reverse - ARKK now down 41% YTD / more than 50% year over year @hankYou seem like a decent person. No reason to walk on eggshells.
I thought I'd be nibbling in the mid
50s but now I still kinda think kooky overvalued holdings of this fund
Can it get to the high 20s.
Dunno
Dumpster fire
Your last paragraph reasonated with me
True dat
Warm regards
Baseball Fan
Innovation in Reverse - ARKK now down 41% YTD / more than 50% year over year I track around 1
5 funds every day. Helps me better understand the markets and how my own funds are doing. No intent to disparage this fund, the manager or those who own it. But, being down 6.6
5% today, it caught my eye. It’s probably a good bet for those who like to roll the dice. Hell, you could probably talk me into buying some Monday. And this is not an invitation to dump on Wood. I’d suggest a bit of humility.
Whatever your losses in this miserable year, they likely pale in comparison to this one. Some lessons must surely reside here about risk taking, investing, time horizons … I suppose in the long run it will do fine. One caveat however: Owning a volatile fund’s a bit different than owning a volatile stock. With the former there’s the added impact of redemptions on the fund’s performance by those with less strong tolerances for risk than you possess and who sell at or near the bottom forcing the manager to unload equities at precisely the worst time.
Lipper
Kyla Scanlon - Taking Some Sense to Make a Nickel
My Commodities Basket got clobbered today - DBC Thanks
@Mark for Lynn's article.
Nice piece
@lynnbolin2021. I agree with your reasoning for owning some commodities in a portfolio. These cycles tend to last many years. Question, did you not include DBC/PDBC because of the high energy-oil percentage? Just curious.
FWIW, here is short video of a show comparing DBC with DBA. I now own both, but much more weighted in DBC. I've owned that one for about a year now.
https://finance.yahoo.com/news/etf-battles-dba-vs-dbc-131500183.html
2022 YTD Damage
My Commodities Basket got clobbered today - DBC Lynn Bolin "Searching for the Best Commodity Funds"
SeekingAlpha
ARTICLE of about
5 days ago
