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LATEST INSIGHTS
Thoughts, insights and opinions from our team of investment experts
What Does a Yellow Light Mean?
Most believe we are destined for a recession, if not already in one. Between the negative sentiment and the stock price valuation reset that needed to take place, it’s not surprising that the markets have meaningfully softened. While the economy is clearly slowing, we do not foresee an imminent recession.
No Signs of Recession–Yet
The economic picture has blurred recently. Despite a murky outlook, our U.S. TECTM monitor has yet to signal the end of the current economic cycle.
Blueberries, Blowups and Babies
Our recent mantra has been “Sell the rallies” not “Buy the dips” because we’ve been expecting much more than a dip. That’s not to say that we’ve been expecting a recessionary-based bear market—prolonged and pronounced negative returns while underlying values are falling. We’ve been anticipating a correction, albeit maybe a substantial one, since prices started falling from levels that were above our estimate of fair market value (FMV).
Expecting High Expectations to Fall
Meme-stocks such as AMC and GameStop have been cut in half from their summer-highs. Much-hyped technology stocks like Palantir, Zoom, and Peloton are down significantly. Even still, large-cap U.S. equities remain expensive with embedded growth expectations too high. As a result, navigating the markets recently has required extra patience and discipline. We sleep better knowing that we are partially hedged in case today’s elevated expectations are quickly tempered and normalized valuations again prevail.
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