from a year ago as markets neared their lows, ritholtz said basically 'close your eyes and buy when there is blood on the street - sentiment always gets too bearish, as history shows.' tricky part is that the post-pandemic period has shredded a lot of 'when this has happened in the past, then expect this to happen again.'
But ritholz was correct this time. SP500 +21% since then.
@RitholtzWealth Getting Long-Term Bullish "History provides no guarantees for the future but I do find some level of comfort in knowing that buying stocks when they’re down big like this tends to offer positive outcomes."
The perma-bulls have been correct on one thing. The “Magnificent 7 Stocks have contributed 9.91% of the SPX's 10.57% gain in market cap. The “other 493 stocks” have contributed just 0.67% of the overall SPX gain this year.
So, gains are bad?
Virtually no gains unless you are in those 7 stocks. Losses among those 493 stocks once inflation it taken into account.
I would think yields back off and consolidate at a higher level. If we move higher on the 10 Year to 5%, we will be back under S&P 500 4,000 pretty quick.
the suckage level is high. New cyclical lows for most indices.
saw something that the chinese have been selling their treasuries, which is causing the higher rates.
So the supply side seems to be the problem - bonds coming onto the market from:
New bonds from the US gummint
China selling bonds
The fed's balance sheet...they aren't selling, right? Just letting bonds roll off as they mature?
And maybe banks have been selling long term bonds for risk control purposes?
Interesting that despite the bloodletting in bondlandia, short term bonds over the past year are up materially. 3-4% depending on the variety. So those who moved heavily into short term bonds are getting some solid alpha and dollars here.
The question is when is the right time to add some duration.
If interest rates fall 1%...
Short term bonds will only rise 3%
Intermediate bonds will rise 7%
long term bonds will rise 20%.
The asset manager who gets this right will make a lot of money! But timing is so hard.
One real estate listing in our neighborhood, price continues to be marked down. Off the high watermark by 30-40%.
wild dynamic in housing going on. The existing home market has frozen up because of the mortgage rates. but the new home market has not, because homebuilders can offer incentives and other possible reasons.
the pent-up demand if this breaks will be ah interesting.
One real estate listing in our neighborhood, price continues to be marked down. Off the high watermark by 30-40%.
wild dynamic in housing going on. The existing home market has frozen up because of the mortgage rates. but the new home market has not, because homebuilders can offer incentives and other possible reasons.
the pent-up demand if this breaks will be ah interesting.
My analysis is the housing market was driven by the same speculation in other assets. Higher interest rates curbed the trading, buying of ABNB properties, Blackstone speculation. When prices compress further, and if we get a severe recession, the dam may break in sales as they did a little more than a decade ago.
If you are a believer in the validity of the Dividend Discount Model which compares the 10 Year Treasury Yield to the S&P 500 yield, you would assume an overvaluation of the stock index that has much further to fall. Remember TINA. How quickly we forget?
In an effort to restore my credibility, I continue to book macro-gains on micro-swing trades. :-)
Well, that's worth something.
How about the gains on the longer term market directions?
FWIW, my short term trade timing tends to be not very good.
Respectfully, I never bought into the idea that Fed market manipulation and Government unhinged spending would be good for people or markets. Certainly inflation, long dated bonds, and CRE reflected that.
