It’s Never Easy
Posted on Sunday, October 30th, 2022
My side project for the week was helping my boys figure out their schedule for next semester. One thing that is striking is the number of online courses offered. I am not sure it is a very good business philosophy for colleges to offer to let you spend an entire semester at home on the computer. What is your differentiator? What makes your college stand out? After going through this process this week, I think my middle son is considering transferring to the University of Georgia to have a more enhanced college experience and increased opportunities. Higher education is ripe for disruption. The boys need to register for classes next week and that itself is a trying process. It is a difficult puzzle to try to solve with many different possible combinations revolving around graduation requirements, teachers, and times of day. They don’t make it easy.
Nobody ever said it was easy making money in the markets. We told you last week that the head scratching rally was coming just like in the summer. The bear market rally is on. The difference with this one is that the market has become much more speculative and vulnerable. In speculative stocks like Gamestop and AMC there was a game being played that was called a Gamma Clench. Speculators bought very short term out of the money call options which fed into the market which propelled stocks massively higher as options market makers were forced to buy stock. Those speculators are now using large ETF’s rather than single stocks. That is pushing the market up. Rampant speculation is going on in the options market and most of it is betting that we will go up from here. The speculators and violent moves are making the market more vulnerable, and the market has the potential to turn hard either way here.
Had an astute client meet with a friend who sells furniture at a large store owned by Berkshire Hathaway and Warren Buffett. He told the client that sales were dropping like a rock and, in addition, now people were cancelling large orders. Remember, a couple of months ago we told you about an investor employed in the lending arena for lower income groups. He told us then that their earnings were going to be down 25%. Well, now the recession is catching up to the middle and upper middle incomes. Should be some rough numbers coming out in the next few months from corporations.
The Fed meets again next week. I suspect that Powell will try and cool markets down a bit. The G-20 conference is November 16th. That should begin the turnaround in bonds and the US dollar. That would help stocks. The end of the year brings funding challenges. The more difficult journey has us headed higher for the next couple of months into the beginning of 2023. 4150 is the target resistance on the S&P 500 for now.
Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett
“Short term volatility is greatest at turning points and diminishes as a trend becomes established.”– George Soros
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.