Category Market History

September Didn’t Disappoint

Coming into September - I reminded readers it has the worst record of any calendar month. The Trader's Almanac tells us the S&P 500 has lost an average of 1% each September over the past 10 years. And over the prior 25 years - the average monthly returns are -0.67%. Dismal. This year, the S&P 500 gave back 4.9% for the month. But it wasn't just September - stocks hit the pause button after June. For the quarter, the Index surrendered 3.64%.The Nasdaq fared far worse - losing 4.12%. None of this should come as a surprise...

History Lessons 

History offers us valuable lessons. During the week, I read an interesting Bloomberg article citing research from financial historian Paul Schmelzing. He explained at a Jefferies (Hong Kong) forum that it’s effectively impossible for data from recent decades to offer insight into whether there’ll be a lasting impact on borrowing costs from the pandemic. This is interesting as the popular narrative is rates will remain high for a very long time.... but will they?

Beware the “Bear Steepening” of the Curve

My last post talked about how the market is now taking its cues from bond yields (less so the Fed) Don't get me wrong... what the Fed does (or says) matters. We will hear more from Chair Jay Powell at the end of the week. Expect hawkish tones. To recap on what I shared earlier this week - globally long-term bond yields trade at their highest levels in 15 years. However, what's interesting is the shorter-end (e.g. 2-year and below) is not keeping pace. This has net the effect of "steepening" the all-important 10/2 yield curve. Question is - will that be a problem? History may offer some clues.

Bulls & Bears Can Make a Solid Case

It's fair to say this is one of the more hated stock market rallies. Why? Rarely have I seen so many caught on the wrong side of the trade. Sentiment is overwhelmingly negative. And yet the S&P 500 is up ~20% from its October low. This missive outlines both the bull and bear case. Either side can make valid arguments. This is what makes things so interesting. In short, you must have exposure to this market. However, you should do so with your eyes wide open.

Remain Wary of Permabears

Jeremy Grantham is a well known permabear. This week - he called for a possible 50% correction. Sure... it's probable we see something in the realm of 20%... but 50%? I decided to look at Grantham's track record against the S&P 500 over 25 years. Guess what - he has woefully underperformed the market. Hardly surprising. Beware of doomsday 'crash callers' like Grantham... and he is not alone. They are dangerous.

Patience

Traders (and investors) are wise to remain patient through this tightening Fed cycle. And whilst it is maturing... there's still more to go. Here I take a look at recent recessions... and some lessons to draw from. Don't be in any hurry here - we are likely to be headed lower

Market Poised to Rally… But Tread Carefully

Bear market bounce or market bottom? For me, it's the former. Two things: (i) we still need to see earnings revisions come down; and (ii) the market has a large technical hurdle it's yet to clear...

Bear Market Lessons… and is Property About to Plunge?

Be careful of any bear market rally - they are usually quite sharp. This post looks at the numerous "10-20%" rallies we saw during 2000 and 2008... and outlines what we need to see to know the bottom "is in"

20%+ Sell-Off Great News for Patient Investors

A 20%+ sell off isn't a time to worry... quite the opposite... it's a time to get excited and to sharpen your pencils. The Fed is about to gift us a once-in-a-decade buying opportunity...