As if not everyone is nervous enough, bubble expert, Jeremy Grantham, warns that we’re in the last throes of a gorgeous bubble about to burst. (In fairness, it’s also been shockingly calling for about a decade.)
However, if the big event is around, it pays to be prepared. our Today’s call It comes from Michael Lebowitz, a real estate advisory portfolio manager, who thinks we may still be early in this bear market. He offers a simple bear market wealth strategy, as buying and holding won’t work in a sticky inflation environment.
In a blog post, he explains how RIA reset client portfolios to prepare for a bear market earlier this year.
Sensing that the Fed was about to pull the liquidity rug out of the markets, we began reducing our risk starting on the first trading day of 2022. Not only did we sell stocks to reduce our overall exposure to equities, but we moved from high experimental growth stocks to lower value stocks. Experimental,” Lebowitz said.
They have lowered the percentage assigned to shares and the types of shares owned, which he said has helped them outperform their benchmark and all primary stock indices for a year now. Provides a chart showing the benefits of this strategy during the major financial crisis.
As he explains, $10,000 was invested in two scenarios in 2004. The buy-and-hold scenario A was fully invested at all times, while B is the same except during the 2008 bear market – when it went to 50% in the S&P 500, the rest in cash earning 0%. Dividends were reinvested for both.
Ria
The advisor said scenario B was stronger because exposure to stocks had been halved for two years. This strategy, he said, means his portfolio came out 41% stronger in that period, while similar action in 2020 and 2022 would have meant better returns.
In follow-up comments to MarketWatch, Lebowitz said they reduced their exposure in terms of allocation and shifted towards lower (lower volatile) demo shares/value stocks at the start of 2022. “We will likely maintain a lower allocation than common stock until that shows,” he said. The Fed is going to be really pivotal.
“We gravitated away from technology towards utilities and healthcare, for example. We also kept our inflation/exposure hedge with energy companies and some materials. Some of his holdings include NextEra Energy NEEAnd the
Duke Energy DukeAnd the
ABBVAnd the
Abbott Laboratories ABTAnd the
CVS Health CVSAnd the
Albemarle AlpAnd the
ExxonMobil XOM
Devon Energy DVN.
“Low beta and lower exposure have been a big winner so far,” he said, noting that his portfolio was outperforming its benchmark by 5% by the time the market peaked two weeks ago. He also noted that the value of growth is outperforming, pointing to a 9% decline in the iShares S&P 500 Value ETF IVE.
vs. a 22% drop in the iShares S&P 500 Growth ETF IVW
So far this year.
Lebowitz believes that markets are facing liquidity headwinds as the Federal Reserve shrinks its balance sheet and focuses more on sticky inflation than the economy.
“This Fed has a very different mission to the Fed that we are used to,” said Leibovitz, who fears investors have not realized it. “What worries me is that it’s different this time.”
Read: Bullish surges of exuberance are common during bear markets. It’s easy to get caught up in it
markets
Market Watch
Chipmakers withdraw YM00 . stock futures
ES00
NQ00
South, with BX Bonds: TMUBMUSD02Y
BX: TMUBMUSD10Y
Selling Oil CL
and gold GC00
DOWN AND DOLLARS DXY
higher. Bitcoin BTCUSD
Just under $20,000.
And the: Crypto.com sues woman after accidentally depositing $10.5 million into her bank account
commotion
Tesla
Fragile demand for electric car makers in China such as Li Auto LI has fallen
The XPeng XPEV.
Meanwhile, the COVID-19 lockdown has infected 21 million residents of Chengdu, China’s technology and automobile hub
Nvidia NVDA Slideshow Maker
It backs away from news that the US is pushing to limit Chinese data center activity. Broadcom AVGO
Will notify after closing.
Elsewhere, MongoDB MDB
Stumble upon bleak expectations and Okta OKTA
It was disrupted by post-acquisition issues and staff dislocation.
Weekly jobless claims, second-quarter productivity and unit labor cost revisions are due at 8:30 a.m. ET, followed by the Institute for Supply Management’s Manufacturing and Construction Expenditure Index at 10 a.m. Atlanta Federal Reserve Chairman Rafael Bostic will make statements later.
Read: Citi analyst warns of ‘worst decline in semiconductors in a decade’
It was reported that Ravel Maganov, head of the Russian oil giant Lukoil, a critic of the Ukraine war, died after falling from a hospital window.
A heat wave on the west coast prompted California officials to declare a grid emergency and fires closed a major highway in the south.
The best of the web
This tiny $3 component is holding back new home construction in the US
Experts say children’s lives are at risk this winter in the UK due to rising energy prices
graph
We return to the S&P 500 chart earlier this week from Jonathan Krinke, chief market strategist at BTIG, who was watching the 3900 line in the sand.
“Futures dropped to 3,924 overnight (as of 9pm ET). Our sense is us.
Approaching a short-term bounce, but a failure to hold 3900 due to oversold conditions would indicate that June lows are in danger,” he said late Wednesday.
BTIG
The bonus chart from blogger The Market Ear, which indicates that the S&P 500 has been hovering below its 200-day moving average for a while, the last time that happened.
market ear
Indications
These were the most searched indicators on MarketWatch as of 6AM ET:
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ribbon |
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bed bath behind |
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AMC |
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NVDA |
nvidia |
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Monkey |
Favorite Stocks AMC Entertainment |
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AAPL |
apple |
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NIO |
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ATXG |
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random readings
Single women, no kids get richer.
Adios men’s skinny pants
this woman Greetings to the good Samaritan Internet captured.
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