Movin’ Out
Posted on Sunday, February 6th, 2022
That was an exhausting week. The next time I pay for movers. There was tension and laughter but moving her into her first apartment will be something that I remember for a long time. It is a beautiful place albeit a bit small. It does appear safe and there is a door man on call 24/7. I definitely felt a lot better after seeing it and the surrounding neighborhood. It is across the street from a Whole Foods and some of the large local corporations are in the area so it felt safe. She came back home for a couple of nights and there were some tears today as she went back to her apartment. Let’s face it – no one likes change. Change is good. Change challenges us and makes us stronger. We don’t have to like it. She is taking on a lot all at once. Starting a job for the first time, moving to the big city and getting an apartment on her own are all monumental events in anyone’s life. I am so very proud of her. We had our moment as I held her and let her cry. She thinks she is moving out but as every parent knows she is never really far from your heart.
Nobody likes change and stock market investors are no different. The Federal Reserve is changing its stance and so may the stock market. Instead of a relentless march higher in equity prices we may be in the midst of a 15-18 month trading range as the battle between the bulls and bears rages on. That range appears to be from 4000 on the S&P 500 at the bottom of the range up to 5000 at the top. The S&P 500 closed on Friday at 4500 which is, oddly enough, exactly in the middle of our proposed range. It makes the decision to lighten up on stocks that much more difficult. However, the longer the market holds these levels the more likely is that it heads towards 5000.
Volatility in the market tends to reduce over time everything being equal. That lower volatility is a natural stabilizer for equity prices. A lower volatility of stocks makes stocks float to the surface. Higher volatility presses the market down like a beach ball under the water. Over time the beach ball will eventually float back to the surface. In a more volatile market traders need to increase their hedges and are forced to sell when others are selling. That would be the pain trade going forward. The “pain trade” is the one that would cause the most pain to the most traders on the street. A slow leak higher before a bigger move lower would cause the most pain. We are closely watching the bond market for clues and will be selling equities closer we get to 5000 in that 15-18 month window.
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.