The Hot Hand
Posted on Sunday, September 30th, 2018
One thing about investing is knowing who to listen to. Howard Marks has a new note this week and we dropped everything to read it. Here are some of the pearls of wisdom he dropped this week. His new book is coming out and I, for one, can’t wait to get my hands on it – “Mastering the Market Cycle”.
Nothing in the investment world is a good idea or a bad idea per se. It all depends on when it’s being done, and at what price and terms, and whether the person doing it has enough skill to take advantage of the mistakes of others, or so little skill that he or she is the one committing the mistakes.
On the current investing environment: Thus I’m not describing a credit bubble or predicting a resulting crash. But I do think this is the kind of environment – marked by too much money chasing too few deals – in which investors should emphasize caution over aggressiveness.
As a reminder, here is a post from Charlie McElligott that we mentioned a month ago. Charlie has been spot on of late and seems to have a good handle on our current market environment. Charlie sees stocks headed higher for another two weeks and then we may need to pay the piper a bit.
WHY SEPTEMBER SETS-UP FOR A POTENTIAL MONSTER EQUITIES/LARGE ‘MOMENTUM’ RALLY – By Charlie McElligott, head of cross-asset strategy at Nomura
All-in, this sets the table for what I believe could be a “grab” month in U.S. Equities through the month of September and into mid-to-late October; HOWEVER, this then leads to an “overshoot” potential once folks have taken net exposures back significantly higher, as my view has continued to be that by late-October, we should again see heightened cross-asset volatility off the back of negative impact of what will be a large “Quantitative Tightening” impulse via the Fed / ECB / BoJ in this window.
Bonds never got those two consecutive closes above 3.25% on the 30 year. Bonds have pulled back from the brink for now. The incredibly large short position in Treasuries might have something to do with that and may continue hold off the march higher in bond yields. We continue to watch the US Dollar as it may hold the key here.
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
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
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.