Courage

Posted on Sunday, September 17th, 2023

Late this week we received news that a young man that we knew was in an accident and had passed. He was a friend of our sons when they were younger and it made me think back to a simpler time when we collected the kids each day from the bus stop. I think we always knew that he wasn’t long for our world. It was too constraining for him. Like a beautiful meteor streaking across the sky, he burned bright. He was a wonderful, kind-hearted boy full of energy with a penchant for thrills and danger. He rode motorcycles and climbed trees with a spirit I wish I could muster. He stepped to a different beat, but he did it with courage and a real sense of confidence that this was his direction. From time to time, we see these angels in life who leave us with big lessons. Be courageous. Follow your own path. Choose to be Happy. He chose his own path. He disregarded how others think and made this life his own.  These were things that we all know but to see it in others gives us courage to do it ourselves.

The market rose for the first half of the week in spite of the fact that PPI and CPI were higher than expected and crude oil hit $91 a barrel—all signs of a looming return of inflation. Unleaded gas is getting closer to the all-important and politically charged level of $4 a gallon. Industrial production and retail sales were both lower, indicating slower growth. It’s called Stagflation and it’s not good. A rally off those numbers made no sense until you realized that the market was just driving to 4500 on the S&P which was one of the biggest option positions.

Large option positions act as magnets during expirations and in the post-expiration period the market can disengage from those big round numbers. We have another opportunity for volatility to return next week. The expiration from Friday will probably help our indicator to go full red and the return of volatility. The market has been too quiet for too long. September and October are the time of the year we see volatility. Will 2023 be any different?

Since 1990, the week after the September triple options expiration, the market is down 79% of the time at an average of 1%. (Nomura). For now, our signal refuses to go entirely red. Maybe the market will cool off enough, and downside hedges will accumulate, which will cushion any news to come our way. We don’t think so. We will continue trusting but verifying our data. The market is due for a burst of volatility. We hope to take advantage.

“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.