…and go away.” This is an old stock market adage, whose relevance is tied to the long ago rhythms of northern hemisphere industrial activity and vacation patterns. Many old plants, especially in Europe, shut down for the entire (very hot) month of August. And even today, at least pre-pandemic, June still witnesses the migration of the most senior portfolio managers to their summer homes. Junior staff would not be authorized to make strategic shifts in investment strategy in their absence …and would be loathe to disturb their bosses’ vacation.

So even though the slogan is in part an artifact of an earlier age, it retains some relevance.

I’ve mentioned this before, but I think it may have particular relevance for 2022.

A consensus seems to be forming that, in the US at least, the general impetus to sell–because everything was perceived to be overvalued–has pretty much exhausted itself. I’ve been thinking this for a month or so–adding the proviso that I’m always too early. But I see this ides popping up more and more in strategy pieces I’m reading. Part of the argument is that the US consumer appears to still be in good financial shape. Bank balances for average Americans are 2x-3x their pre-pandemic size, and problem credit card accounts are relatively small. Short-term interest rates, though potentially rising, are still negative in real terms. Yes, oil prices are back at 2014 levels–and even factoring in slightly better car mileage and inflation, gasoline is just above the all-time highs of close to a decade ago. All in all, not a boom, but not a bust, either.

If this is correct, our job is to separate potential winners from potential losers in our portfolios. Perhaps it’s latent Schadenfreude, but I’ve always found it easier to identify losers than winners. Absent brilliant winner ideas to replace stocks culled, there’s always the index fund as a destination for sale proceeds.

My guess is, and has been for some time, that we have the summer to figure this out, with a potential rebound not likely until the weather starts to cool.