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History Suggests S&P On Bear Market Trajectory
2025's early-year stock correction on Wall Street will go down as one of the quickest on record.
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I’m having a very difficult time staying invested. I know it is cliche to say this time is different, but this time does feel different for one orange, obvious reason. I’d rather miss out on some upside to protect my capital than leave it exposed to the whims of a lunatic and his enablers.
Generally speaking, it’s not a good idea to be uninvested. The odds of a GFC-style drawdown are vanishingly small, particularly in the era of the CB put. (Caveat: Not investment advice. Caveat 2: Trump’s dangerous.)
I needed to hear this, thank you. It’s hard these days to draw a reasonable line between valid concern and irrational despair. It’s more difficult to separate my fear for our democracy from that of my own personal finances, or to look ahead with hope that things will get better somehow because, as a friend of mine used to say, it’s darkest right before it goes totally black.
@Mountain Economist. At the risk of stating the obvious, you could consider moving a meaningful portion to cash earning 4%. With the remainder, spread it across the portfolio allocation with which you are comfortable. There is nothing wrong with an over-allocation to cash at 4% risk-free until you feel more comfortable. So many variables here that only you personally know (age, risk tolerance, net worth, how soon you will need the money, etc.). “Never risk what you need for something that you’d like to have.” -W. Buffett.
Your “CB put” comment caused me to re-read your 2020 article, “Where Were You When the World Didn’t End?”, and focus on Kocic’s 2017 chart and comments (included in H’s piece). Thoughts on current market conditions relative to the upper right (“flirting with disaster”) and lower right (“forced deleveraging”) quadrants of Kocic’s chart? Thanks.
I still love that piece. It was a forerunner to the Monthly Letters. For the super-fans among you, the opening vignette from “Where Were You When the World Didn’t End?” can be placed between the closing vignette from “Sinners And Saviors” and the vignettes from “Charon’s Obol” chronologically.
For what its worth, my portfolios are more defensively positioned than any time since 4Q21. Equity is not zero, but is heavily skewed away from Mag7.
My wife enjoyed visiting the Washington DC museums last weekend. Today I got a NYTimes alert that DOGE is looking to shutter the museums by defunding and firing archivists, curators and librarians. A major target of P2025 is to destroy humanism and all its evils. Maybe they will sell-off all the degenerate art in a national debt reducing auction catering to the very few elite citizens of Wealthistan to never be seen in public again. Wealthistan’s President, Musk is untroubled destroying such degeneracy making way for a Great White Hope to come. The US has been conquered by a foreign country. Borderless, tax-dodging Wealthistan.
Denial. As you described it cogently and explicitly in last week’s Weekly. In Nov, people knew “chaos is chaotic,” they just delusionally believed the guy who had tried to overthrow the government and recommended bleach enemas to cure covid would bring an everlasting state of calm prosperity to the US. Deep delusional denial by many supposedly “smart” people.
Trump pump, Trump bump, Trump dump, Trump slump.