Some thoughts:
- Bear market bounces typically provide enough cover for the liquidity needed so that those who want to evacuate the premises may do so. They usually last approximately two months before they fizzle out.
- Q4 earnings, when they are reported in January, should be rosy enough or at least, not bad enough, to warrant further selling. That may provide a short to intermediate term base for the markets.
- The stock market of 2000/2001 may provide a guidepost as to what can be expected for investors, as it was the last time the Fed was hiking into cratering stock prices while investors had as much equity exposure as they do now.
- The reflexive nature of equities in relation to the economy is the biggest question of all. The recession of 2001/2002 was directly caused by the deflation of the tech bubble and the adverse effect it had on the economy in general.
- The stock market is now 155% of GDP. It is essentially the economy. By March-April this selloff should show up in economic data, if not earlier.
- The Fed will very suddenly reverse course. It will be unexpected.
- The fact that QT is on autopilot according to the Fed is downright frightening. Nothing should be on autopilot that has never been attempted before. Autopilot works with tried and true systems that require little thought, only execution.
- In an economy largely driven by QE the past decade, how can QT not be expected to result in a substantial contraction?
- The balance sheets of developed economies, primarily the U.S., is in no shape to fight an extended downturn. Weakness in the US Dollar is all but guaranteed in the time ahead should the economy weaken significantly.
- The specter of 2008 looms large. Decisions made by investors during downturns are framed largely via 2008 as a corollary. The resulting overreactions, causing statistically anomalous price action, has to be considered by every investor.
- At its essence, our capital markets are a confidence game. There has never been a time in the past where confidence in our system has potential to erode as quickly and as violently as exists presently. This is due to both the current state of leadership, the balance sheet of the government and the fragile state of the economy.
_______________________________________________________________________________
From time to time, I email individual company research, commentary and excerpts from my monthly investor letter to those who are interested. If you would like to receive future emails, please write me at mail@T11Capital.com
Disclaimer
This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice.
This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website.
T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing.
Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding capital markets or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in, the transmission thereof to the user. With respect to information regarding financial performance, nothing on this website should be interpreted as a statement or implication that past results are an indication of future performance.
