In Stocklabs we have data doing back to 1993 for SPY and 1999 for QQQ. For July, the NASDAQ is up nearly 10% — the largest return for July on record. Perhaps the NASDAQ had a bigger month from the 1970s into the 1990s, but it wouldn’t be by much. This is, for all intents and purposes, the ceiling for risk in any given July over the past few decades.
This doesn’t mean we’re done going higher — because who really knows?
I, on the other hand, have no participated in this rally for a variety of reason — mostly due to the harsh reversals in commodity stocks and my stubbornness to expose myself to the markets. I am down 4.2% for July, an abhorrent return when juxtaposed against the NASDAQ. However terrible it may be, I am +46% for the year and could do nothing for the rest of it and still crush 95% of managers who get paid for their lackluster performance.
I do not ebb when you ebb and prefer to flow when people are ebbing. There is something alluring about being contrarian, as long as it doesn’t annihilate you during market runs.
My first mistake was not trusting the market as it went up. My second mistake will be jumping in late before a leg lower, should we get one. The best course of action is to stay small and play the margins, hedging the whole way — because, at some point, the market will bend back to my direction and I’ll be rewarded for my obstinance.
At least that’s what I tell myself at night.
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Anyone thinking we are just a few short quarters away from central bank cuts is being fucking delusional.
PMI numbers are contracting at least in Europe now and recession is probably coming early 2023, but this isn’t going to bring deflation like in the past. We’re getting PMI weakening because of shortages, but that is going to hit final assembly goods and make prices even worse. PPI and CPI numbers will continue higher which will force tighter monetary policy to keep feedbacks under control.