‘A Reversal Is In Sight’ Stock Market (And Sentiment Results)

We are writing this from Portugal this week. We had planned a trip to visit Lisbon, Algarve, and Sintra a few months ago. The longer you’ve been in this game, the more you’ll understand that the market and your position can only go in one direction for him. Directions (below) as soon as you go on vacation! If you work in business, you’re probably giggling while reading this. By the time the plane lands on the tarmac in your home country, the selling pressure is gone, the market has recovered, and there’s nothing left to do. It’s painful when I want to play golf, and fun when I want to work. God has a sense of humor…

Sometimes it’s good to get away from New York City or Connecticut to get some perspective. In summary, no one is interested in the market outside of Wall Street.They live their lives in the sunshine (I I guess good companies know that sooner or later they will resolve upwards). Yes, this is my comment! But seriously, this time difference is ideal. I play 18 holes before the market opens, work, and spend the rest of the day having family time. Rinse and repeat.

If you keep an eye on the market situation, it’s clear that things are trending downward and a reversal is just around the corner. If you want to pinpoint the day, I arrive in Newark on Sunday.

MoneyShow “Inside Alternative”

Today I joined MoneyShow’s special virtual segment on alternative asset managers. Thanks to Debbie Osborne for having me on board.

Below are my notes before the session. You can see that the host took it in a spontaneous direction.

*Tell our audience a little about your company and investment strategy.

“Simply put, we buy.” straw hat Durable, quality and predictable cash generating assets When you are temporarily disabled or at a disadvantage. What we usually have is 8-12 companies account for 80-90% and, where appropriate, an overlay of long-term derivatives to enhance returns without the use of significant leverage.we take Occasionally take short positions when the risk is asymmetric and in our favor. And express with long premium only when you can limit risk (i.e. 3-5x EV for 1% spend). Everyone wants to go short right now, but an environment where M2 money supply is $3 trillion above the long-term trend doesn’t seem like the right environment to do it.

*The low interest rate environment of the past 15 years has favored long-term assets such as bonds and growth stocks, while creating challenges for many value strategies. Eighteen months ago, everything changed, and changed dramatically. How has the advent of inflation and the new central banking regime affected your investments?

The simple answer is that you have to do it now both. Last fall, when Tech/Semi was hated and unpopular, we bought large positions in his AMZN, GOOGL, and INTC. Many value names have fallen out of favor now, so we load names like GNRC, SWK, DIS, BAC, and BABA. Spend less time on macros and more time on cash generation and performance.. You probably won’t buy an apartment building or farm (or any other cash producing asset) based on this week’s information. Put/call ratio and vicks level (Case in point) Could you? We think the same way about business, and we buy when Mr. Market is manic.

• Ali and Tom, both in Europe. Does the outlook change there?

Europeans are generally more pessimistic. If you want to feel down, read a book by a SocGen, BNP, or CS market strategist (oops)!

• Do you predict a recession in the US?

We already had it in 2022.

*Please elaborate on how you see the market opportunity set over the next 1-3 years. Where are the biggest opportunities and the most concerning red flags?

The biggest surprise between now and the end of the year is The bond crash is nearing the end. A hedge fund is overcrowded shortCommercials are long. pension demand We plan to secure a yield on long-term debt of 4.5% or higher. And with yields at “game-changing” levels, we wouldn’t be surprised if central banks intervene. The Bank of Japan intervened at last October’s lows to protect the yen, and the market rose while the dollar crashed. We wouldn’t be surprised to see this action replayed now. This has big implications: 1) Bond auctions and yield compression will help banks, utilities, and REITs (which were as hated as tech last fall). 2) The moment this short-term countertrend dollar appreciation stops, emerging markets will skyrocket.

The framework we use for the next three years is similar to 2001-2007, which was a massive rally in emerging markets, value stocks, and small-cap stocks. We can expect more modest returns in the tech space (but we’ll do well).

*Shorting stocks is one of the most difficult investing endeavors, but it can be very profitable. How would you describe your short selling philosophy? Are there any particular features or characteristics that you look for or screen for?

Although historical multiples are well above average, they are contributing to slower growth and downside.

*Some sectors, from banking to biotech, tend to work fairly closely together. Do you typically prefer to go long or short individual companies or entire sectors?

Biotechnology (lottery/basket sector – “Trade and Pharmaceuticals as Catalysts”), others by company.

*Looking to the next 3-5 years, what do you think will be the biggest surprise for mainstream investors?

• of The market will rise much more than people expected. This is due to millennial housing/family formation (pigs in Python concepts).
• China will see its last parabolic rise in the late 80s (like Japan) before collapsing in a demographic fiasco.

respect the facts

@SethGolden on Twitter: “All we’re hearing is that savings rates and oversavings are going down, and consumers are less stressed about starting student loan repayments again in October. Yet between the second and third quarters, household net asset value increased by about $6 trillion, while debt rose by only $500 billion…equities and The market price of bonds has fallen.

Now let’s move on to the short-term view of the general market.

In this week’s AAII Sentiment Survey results, the percentage bullish rose to 30.1% from 27.8% the previous week. The bearish percentage rose from 40.9% to 41.6%. Individual investors are concerned.

CNN’s “Fear and Greed” dropped from 25 last week to 19 this week. Investors are scared.

And finally, the NAAIM (National Association of Active Investment Managers Index) has dropped from 54.33% of equity exposure last week to 43.01% this week. When the tide changes, the “end of the year chase” becomes more serious.

Opinion, not advice.