A Bad Song and a Worse Investment Strategy
It’s that time of the year where normally tolerable radio stations insert so many holiday songs into the mix that it becomes unbearable, and apparently it is the time of the year where we are reminded investments only go up in December.
In general, I don’t disagree. It is a good time of the year for markets and back on November 19th I wrote Tis the Season. The S&P had closed at 1,360 the prior day and IG19 was at 109.5, albeit down from 113 the day before.
But right now, I cannot share in the holiday spirit. While China is showing it may have turned the corner, at least temporarily, there are too many concerns out there for me right now.
The idea that investors are going to get long and then do nothing waiting for the end of the month strikes me as too unrealistic. Something is likely to test that hypothesis, and there are far too many people paid for performance that are long right now. Maybe this will be the “performance chasing” rally that works, but I am pessimistic.
We have our own political problems. The Greek deal is about to go through that stage where everyone realizes it was less of a deal and more of a promise to plan a deal.
Then, as I went through in a detailed not to clients, some favorites, like HY ETF’s are not set up to do well even in a risk on environment.
It is possible that I change my mind. That I get converted back to liking this market, after all, I had seen a “perfect storm” scenario where the U.S., Europe, and China all deliver and we get as high as 1,500, but right now, I don’t see that scenario particularly likely, and feel strongly that positioning is overly bullish.
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