The Waiting Game
Equity Markets were up last week with a strong rally after a period of selling pressure. Nonetheless, there is still considerable uncertainty with respect to inflation, interest rates, and corporate earnings. Relative to market drawdowns of the more recent past, we have been saying this one has the potential to be much more protracted. Consequently, there is no need to panic and add to risk positions “for fear of missing out.” We think the appropriate position is to take a slow and steady approach to this market until economic direction becomes more certain. Until that time, both patience and caution are in order. All bear markets have rallies, sometimes sharp ones!
Until we gain more clarity, we will continue to exercise caution with respect to positioning and new portfolios additions. Eventually, we will begin researching the next great investments for the next bull cycle. In the coming weeks and months we will be researching such things and commenting on the next great investment opportunities. Until then, we will maintain a cautionary stance until the macro-picture crystalizes a bit more. Earnings season is in full swing even while the Fed determines its next interest rate move this week. We will attentively monitor the unfolding of these events and comment on important developments as appropriate.