Stable cryptos are blowing up, spec-tech is getting wrecked, and the bond market isn’t any better.
But there’s light at the end of the tunnel.
We’ve been here before.
It is critical to zoom out and remove emotions from investing decisions.
But how?
Time for a 🧵👇
But there’s light at the end of the tunnel.
We’ve been here before.
It is critical to zoom out and remove emotions from investing decisions.
But how?
Time for a 🧵👇
1/YTD:
NASDAQ 👉 down ~25%
S&P500 👉 down ~16%
TSX 👉 only down 5% (commodity-heavy)
Bonds 👉 down 9.4% (worst in history)
This is when dollar cost averaging provides excellent long-term return profiles.
If you’re out of cash - sit and hold unless the thesis is broken.
NASDAQ 👉 down ~25%
S&P500 👉 down ~16%
TSX 👉 only down 5% (commodity-heavy)
Bonds 👉 down 9.4% (worst in history)
This is when dollar cost averaging provides excellent long-term return profiles.
If you’re out of cash - sit and hold unless the thesis is broken.
2/ When in doubt… ZOOM OUT
There have been so many crises throughout stock market history that it's hard to toss them all onto one image.
The end result?
The slow grind up and to the right ultimately resumes…
There have been so many crises throughout stock market history that it's hard to toss them all onto one image.
The end result?
The slow grind up and to the right ultimately resumes…
3/ When you think of Wall Street you always think of bears and bulls.
A Bear market is defined as a decline of more than 20% often accompanied by negative investor sentiment and declining economic prospects.
So let’s look at the checklist ☑👇
A Bear market is defined as a decline of more than 20% often accompanied by negative investor sentiment and declining economic prospects.
So let’s look at the checklist ☑👇
4/ Down more than 20%?
S&P500 ❌...but close
NASDAQ ✔
TSX ❌...not close
Negative Investor Sentiment?
S&P 500 ✔ Investors shifting to value
NASDAQ ✔ Death, mayhem, and destruction
TSX: ❌ More optimism now in natural resources
S&P500 ❌...but close
NASDAQ ✔
TSX ❌...not close
Negative Investor Sentiment?
S&P 500 ✔ Investors shifting to value
NASDAQ ✔ Death, mayhem, and destruction
TSX: ❌ More optimism now in natural resources
5/Declining Economic Prospects?
S&P 500: MAYBE - Supply chain constraints, inflation, but earnings are still in positive gains territory
NASDAQ: MAYBE - Higher interest rates punishing long-duration assets despite solid fundamentals
TSX: ❌ - Improving if anything
S&P 500: MAYBE - Supply chain constraints, inflation, but earnings are still in positive gains territory
NASDAQ: MAYBE - Higher interest rates punishing long-duration assets despite solid fundamentals
TSX: ❌ - Improving if anything
6/ Overall, I would describe NASDAQ in a bear market, S&P500 as getting there (it will be soon), and the TSX should skate on by if commodities hold up.
But we have seen this before:
But we have seen this before:
7/ But it's not all doom and gloom!
If we look at the O&G market the Russia/Ukraine conflict has brought a struggling sector in secular decline back to life.
We immediately realized that we have not built out nearly enough renewable capacity to keep up with global demand.
If we look at the O&G market the Russia/Ukraine conflict has brought a struggling sector in secular decline back to life.
We immediately realized that we have not built out nearly enough renewable capacity to keep up with global demand.
8/ In a market where fear and contagion are present, fundamentals matter less and less.
Since a majority of the recent market run-up has been sentiment (multiples), rather than earnings, the drawdown has been dominated by multiple compression as well.
Since a majority of the recent market run-up has been sentiment (multiples), rather than earnings, the drawdown has been dominated by multiple compression as well.
9/The daily stock performance of a lot of these names around earnings depended much more on macro indicators rather than results.
Results in the recent quarters after the pandemic continued to trend up.
CONCLUSION: Macro over micro for now…
Results in the recent quarters after the pandemic continued to trend up.
CONCLUSION: Macro over micro for now…
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