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Macro Tourist: ‘I Have Abandoned My US Equity Longs, Am Leaning Short On A Trading Basis’
Read more from The Macro Tourist
As many of you are aware, I am usually an equity bull. Let’s face it, over time, stocks often rise and it’s difficult to fight that tendency.
Yet the trader-in-me believes the time to lean against this propensity is upon us. I have abandoned my US long equity positions, and am leaning short on a trading basis.
Why the shift in tone? Let me sketch out the worries that have finally overwhelmed my desire to stick around for the last innings of this party
You said it all Kevin ….I got where you are a lot earlier and that is a problem for me as we ‘ain’t there yet ‘ … Thanks for the eloquent presentation… This one ranks a re read ……
Concur 100%. The “long hope” trade looks to be in real trouble after that UN address this morning.
Chase survey confirms sentiment caving
Plenty of bad news but the market barely dips. If it was flaxseed or smoked rubber futures, you would take that as a bullish sign, yes/no?
Forgot to ask….who/what is that Ornery little Sucker about to chomp your finger ????
Chart the SP50 highs from Jan 2018. The index has hit 5 highs since then and 4 have been “record” highs. The return, high-to-high, has been only about 5% over 20 months, or about 3% annualized. To get that 3%/yr, the index has endured 4 declines, averaging around -10% each (a couple of -6%s, a -10%, a -20%). The period between the declines has gotten shorter and shorter, about 10 months then 6 then 3 then 2. This looks rather unattractive to me.
Of course, technical guys will say the SP50 is in a rising flag, right?
And the market shrugs off talk of impeachment, war with Iran, declining corporate profits, declining consumer sentiment, disruptive repo stuff that 99% of us don’t fathom, trade wars, negative interest rates around the world…….
A serious correction won’t happen until the worrisome backdrop improves.
I have been amazed at how markets have shrugged off all the risks in relatively short order ever since the Brexit referendum back in 2016. This certainly wasn’t the case when I first started investing – just a whiff of these kind of tensions would really sour sentiment.
Of course, in this environment where true price discovery is so distorted by Presidential tweets and central bank actions/jawboning, it is very hard to commit capital steadily as an investor (as opposed to being a trader).