Should I just keep regurgitating a lot of things that I have been spewing on and off here? The year is slowly drawing to a close. Some of my clients and partners are even more quickly disappearing off on holiday – how lucky. I have started working on my New Year letter (packed with “wild predictions” for 2024) and other reports for some clients.
I still remember that the Covid-19 pandemic is the first real global crisis in the social media age. What I have learned is that information spreads really fast in the social media. False or sensational information spreads fastest because we all love fake stuff.
Oh, you just sold all your stocks or investment funds in panic and then ran to the bathroom and locked the door for a couple of days. Wonderful because you could buy back at higher prices once the panic is over. Nobody in the world has it all. The short-term correction is always going to happen.
Bulls and bears are always battling it out in the market and it is important to maintain a big picture perspective. Panicky buying and selling will always occur because of human nature. Should I pick up my ball and go home? Nobody is going to kick the bucket. Like the virus, risk is actually what we cannot see. A little surprise usually does more damage than something big that has been in the news for months.
What is next after a “hot” November thanks to the easing of the financial conditions? It is interesting to note that December has historically been one of the best months of the year. Will it be the same this year?
Elsewhere, Jack Pitcher, writing in the Wall Street Journal, discusses the accumulation of money that has taken place:
“Investors are plowing cash into stocks and bond funds. Invesco’s QQQ exchange-traded fund, which tracks the tech-heavy Nasdaq-100 Index, reported its largest weekly inflow in history the week of Nov. 13. Funds that track high-yield bond indexes-the higher risk portion of the corporate bond market – reported their two highest weekly inflows on record in the middle of November.”
“Meanwhile, institutions and investors together have a record $5.7 trillion parked in cash-like money-market funds, many of which are yielding above 5%, according to the Investment Company Institute.”
Mr. Pitcher is suggesting that the next move for these monies might be in the stock market or the bond market and this will be certainly good news for our existing positions. Howard Marks says that when everyone is scared, you should consider investing as that means things are selling at a discount, and when things are super toxic, the deals of a lifetime may emerge.
Honestly, some of the returns that we are seeing so far this year are completely exceptional for some investors who bought at much lower prices last year and it is unrealistic to expect these kinds of returns going forward on a consistent basis. I can hear the jeers and protests.