What Do You Call a Deer with No Eyes? No Idea!!!
That’s the answer to the question, is this the bottom? Anyone who tells you any different is trying to sell you something. We are victims of the charts in phases of volatility like this. I do however think there is some individual positions that are poised to provide some great returns over the longer term.
The market is trying to find a base at this point. In times like these (specifically the past two months, you’ve seen the markets fall off, grind higher, only to fall further). We seem to be locked in a downtrend for now, while we wait for some headlines that can help us put that base in.
Headlines that will help the market bottom out include “moderating inflation” (I’ll talk more about that below), “Fed backing off it rate hike rhetoric”, “Russia pulling back”, or “China easing lockdowns”. The latter three we are unlikely to hear anything in the near future. I wrote in last weeks note about peak inflation, and my belief is still that we may have seen it. The data to support it will not be released for another month or so.
So, what to do? Nothing. I’m doing it for you. Well, that’s not entirely true. There is something you can do…I would like you to understand/expect the following. As the markets try to find a base, it is extremely likely that in between now and finding the bottom (if we haven’t already found it) you will short see periods of time, when the major indexes get a 4-9% pop. That does not mean that we are on the way to new highs. It’s more likely that we will get a few very bad days in a row to bring us back to the lows again. We are light on news presently, (aside from earnings, which the market couldn’t care less about right now) so you will likely continue to struggle with whiplash till one or some of the headlines above come to fruition.
This is the time for me to take advantage of the opportunities that are presenting themselves. These quick swings can give me some good chances to make some quick cash. The name of the game on managing portfolios is hitting singles, and not trying to hit it out of the park. Lower your cost average in positions by buying them when they get beaten up, if you get double digit moves in a quick period, put that in your pocket and get ready for the next opportunity.
Although buy and hold forever would make my life easier, the strategy has some severe holes in it.
Here’s the buy/sell.
Mick Graham, CPM®, AIF®
Branch Manager Raymond James
Financial Advisor Melbourne, FL
Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature and is not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results. Any opinions are those of Mick Graham and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Investments mentioned may not be suitable for all investors. There is no assurance these trends will continue, or forecasts will occur. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.