2022 has started unusually poorly for stocks.
www.cnbc.com/2022/07/01/sp-500-had-worst-half-in-50-years-but-the-60/40-portfolio-isnt-dead.html
Adjusting for inflation, the first half of the year was the worst for $SPX500 in 150 years.
www.marketwatch.com/story/forget-the-1970s-this-market-is-drawing-comparisons-to-the-1870s-11656678898
In the past, weak first halves were always followed by strong second halves.
www.marketwatch.com/story/whats-next-for-the-stock-market-after-the-worst-1st-half-since-1970-heres-the-history-11656503671
The sample size is small, however (1932, 1939, 1940, 1962, 1970), and this time, the reversal may not happen.
The reason for this is that central banksโ interest rates hikes will keep slowing the economy into 2023.
twitter.com/MichaelKantro/status/1543946802243723264
And the markets rarely bottom before the economy.
twitter.com/MichaelKantro/status/1542900252969209857
In the second half of 2022, investors will have to contend with interest rate increases, persistently high inflation, falling earnings estimates, and geopolitical risks. GDP is already falling in the US,
www.atlantafed.org/cqer/research/gdpnow
and it was recently reported that if Russia were to cut oil output, oil prices might shoot up to $380, which would cause a severe global recession.
dailytrust.com/jp-morgan-warns-that-oil-prices-could-hit-380-per-barrel
Overall, we see the balance of risks to the economy as the worst since 2008 and therefore hold a large allocation to cash. The average recession sees stocks fall 40%; we are not there yet.
We would like to hold stocks – they are the place to be in the long run – but will only buy aggressively when the macro momentum turns.
๐ฎ๐ฌ๐ฎ๐ฎ ๐ฝ๐ฒ๐ฟ๐ณ๐ผ๐ฟ๐บ๐ฎ๐ป๐ฐ๐ฒ ๐ฌ๐ง๐
@triangulacapital -4.0%
$SWDA.L -20.0%
๐ฃ๐ผ๐ฟ๐๐ณ๐ผ๐น๐ถ๐ผ ๐ฐ๐ต๐ฎ๐ป๐ด๐ฒ๐
The share of cash in the portfolio was increased to 60%.
