Reaching for The Top
Posted on Sunday, November 27th, 2022
We made a 21 lb. turkey so there were plenty of leftovers. We usually get a 19 lb. bird, but Publix only gave us a choice of 17 or 21 lbs. we took the over. I love leftovers. I think that I put on 10 lbs. well, maybe not 10 but it sure feels like it. I was back in the gym on Friday morning, but I have given myself plenty of work to do. We also managed to get the Christmas Tree up on Friday afternoon. It is one of our little traditions. At least that is what I tell the kids. I need their help to get it all done. (Besides, I was busy removing the flying squirrel from the attic. Humanely, of course. But that’s a story for another day.) Right after we get the tree up and the kids are busy putting the ornaments on the tree, I take a moment and soak it all in. It reminds me of all the Christmas’ we have been fortunate to spend together. I remember in the early years all the ornaments would be clustered in a heap at the bottom of the tree. My boys can now stretch and reach the top of the tree without assistance from a ladder and the ornaments are placed with precision. So very grateful – Time flies.
Not much has changed in the past week with the holiday taking center stage. This is what we had to say last week in front of the quiet holiday week. All is, of course, not right with the world but I think the Holidays are going to help fend off most of the trouble. While we are itching to de-risk at these levels and sell more equity holdings the Holidays have a way of keeping Wall Street at bay and let the good times roll. The cap on this market appears to be between 4050 and 4150 on the S&P 500. Just so you know the market closed Friday at 4026.
I keep hearing the same refrain from people. The market always comes back and sell bonds. If you have read me for some time you know I tend to be a contrarian. We added bonds 2 weeks ago and are up 8%! We think there is room for more gains into the first half of 2023. If we are headed for a recession with a commiserate decline of inflation and lower interest rates then bonds would be the place to be. As for the market always coming back, that depends on monetary policy. We think that inflation is a ten year battle so things may be more about being opportunistic and tactical rather than just simply watching stocks bounce back.
This could be an important week with Jerome Powell speaking on Wednesday. This is where we could see the impact of the large December options expiration. In a further move higher in equities we look to de-risk further and perhaps add duration in bonds. Bonds could be the better performer in the first half of 2023. The post pandemic shift to headwinds rather than tailwinds are still in place, and we need to be patient and buy cheap. Valuations are still elevated Singles and doubles. Not home runs right 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.