end of year thoughts (iv)

Happy Holidays!!!

positioning for 2023

Looking at the US stock market from it’s top a year or so ago, the S&P 500 has declined by 20% from its late-2021 highs; NASDAQ is down by almost 40%; and the speculative ARK fund ARKK, is off by very close to 80%.

The S&P 500 Value index is off by only about 8%; the corresponding Growth index is down by 30%.

For the S&P as a whole, we’ve been experiencing what might be called a garden-variety bear market. For the S&P Value it’s been more like a walk in the park. For the worst of the other markers, however, declines have been more reminiscent of 1973-74 and 2007-09, the worst stock market performances since the Great Depression of the 1930s.

The big question is, as it always is, what comes next.

What I find most striking about the, admittedly limited, brokerage house strategy I’ve been reading is that the consensus seems to be that the stocks that haven’t fallen much will continue to outperform and that the current crash-and-burners will continue to implode. Maybe so, but this strikes me as odd.

I’ve just been called to babysitting, so I’ll pick this up on Monday. For now, I’ll just say that the way I think we should deal with this question is to craft a portfolio whose success/failure doesn’t hinge on this single, to me clear-as-mud, issue.

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