I am day seven here in Bahamas on lockdown and it is storming outside.
It is fitting because it is a FED announcement day and it seems set in stone that the FED will be raising interest rates 50 basis points.
The markets that I care about have been storming for six plus months and A LOT of inflation and interest rate hikes have been priced in.
No matter how defensive you got with a growth portfolio, the damage is real.
In my 8 to 80 stock portfolio (long only), I went to 50 percent cash months ago and my drawdown from all-time highs is still over 20 percent.
We had been in such a long and easy growth market for so so long that now as the tide rolls out, no matter how defensive you get you can’t protect the weak ‘growthlings’ (venture portfolios). You will also start to notice that you own way too many companies/stocks/things. I have been vigilent with stocks but not with personal seed investments.
It is easy to make fun of Cathie Woods and Softbank and Tiger as the tide rolls out on growth – I have made my own silly jabs – but as I have had the lockdown screentime to catch up on email and the family personal portfolio, there would be some chuckles about certain of my investments too.
I joked yesterday on Twitter that I have had so much time to catch up on email that I am returning some from 1999 and from my blackberry (a retro email afternoon).
So what to do now?
The simple and easy answer I have been sharing here for months is to do less and hold more cash are the easiest way to ride out bear markets and wait for growth trends to emerge. They always do.
With rates and inflation back in the macro picture, commodities, managed futures trend strategies and even crusty old global macro analysts are back in favor. But most of us do not have the time to do this type of research and allocate.
The ‘yoots’ will point to crypto as ‘the new global macro be all end all’ but I am skeptical (see yesterday’s post).
Furthermore, global macro mostly died in a zero rate environment post 2008 and a lot of the great global macro people found Bitcoin and went down the rabbit hole with the yoots. But, the global macro old timers can pull out their old playbooks and rolodex’s to catch up quickly and the ‘yoots’ are left with just crypto which I don’t think will do the trick in a long recession or bear market.
If you want to listen to an ‘old timer’ wax poetic on the current global macro environment I recommend grabbing a stiff drink and a Tylenol and listen to my pal Raoul Pal dive into everything current in this YouTube Video. I did.