The bear market in stocks in 2022 began like most others in history: with a deterioration in the number of companies participating in the market uptrend. Initially weakness is seen in the smaller more speculative stocks and over time it migrates into the large capitalization companies. In the end, no stock is spared as selling Read More
From the Trading Desk: The Next Market Catalyst
Last week the S&P 500 Index experienced its 7th consecutive weekly decline while the list of companies reporting weaker Q2 forecasts keeps growing. Big retailers such as Walmart and Target slumped after cutting outlooks amid inflation pressure on future profits. As I write this, retailers have recovered some losses after Macy’s and Dollar Tree raised their Read More
A Fundamental Flaw: Psychology Trumps Fundamentals in a Bear Market
Psychology is the great underappreciated variable in investing and trading that magnifies the underlying fundamentals and consequently exacerbates price trends. Perhaps the following John Templeton quote states it best: “Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to Read More
From the Trading Desk: Inflation is Here to Stay
April commenced with fresh data from the Bureau of Labor Statistics showing that the CPI (consumer price index) rose 8.5% year over year last month compared to March of 2021, a level that marks the fastest increase since December 1981. Fed officials discussed acting more aggressively to combat rising inflation, even suggesting various policymakers “would Read More
What Happens When Interest Rates Rise?
Interest rates are forefront on investors minds as the pace of rate increases over the last several months is something not seen in decades. Interest rates determine the cost of capital in an economy and subsequently have an outsized impact on the trajectory of economic growth. What does the recent sharp increase in rates mean Read More