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This ‘Freakout’ Isn’t The ‘Big One’ – That Comes Later: Nomura’s McElligott
If you ask JPMorgan's Marko Kolanovic, the October selloff in U.S. equities and the accompanying de-
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This subscription is the best $5/month I’ve ever spent. It’s so helpful to read a sophisticated analysis, citing top investment pros…if only to confirm what my gut and intuition have already told me.
Thanks!
IDK, it seems like there are a whole lot of people calling for one more good rally before lights out. It’s feeling a bit too consensus…
So what I keep wondering is if everyone knows the “Big One” is coming so very soon why would anyone wait? Isn’t is more likely that people choose to treat this “Freakout” as the “Big One” and “prepare” now, thereby turning this into one long drawn out “Big One”?
Right, we can’t build our short positions unless somebody out there buys at the top!
Buying great companies with strong bal sheets, strong FCF conversion and generation, defensible biz models (moats) at good prices will lead to outperformance. There are gifts out there due to forced selling, panic and fear. I think about how sensitive the business is to the econ cycle and to the reg environment and make sure i am comfortable with risk given tge price I am paying. I saw little opportunity 2 months ago and see a number now. I do think recession will happen in the next 18 months but expect the companies I am buying to weather the downturn and still grow their earnings at a slight premium to the market. The market will do what it will do but the businesses will be more stable offering opportunities for those that can think rationally, do their homework, manage risk (buying quality at good prices not using leverage) and using the greatest alpha generating strategy “time arbitrage” using other people’s performance pressures to benefit our pnl. I too expect a washout but with the above it can be handled and used as opportunity. Hope this helps you focus and trade/invest well.