I remember one year during the GFC we made a calendar with images of traders with their hands on their heads....not good times, but good times. In the immortal words of Gary Cherrone of Extreme, "more than words to show you feel", images. If you haven't feel free to read my summary/review of a book about managing risk check out this post
Imagine if the ISM Services data was bad yesterday? It was in expansion with strong internal employment and prices paid measures.
And all of a sudden financial conditions matter again. Remember in late 2023 when people were concerned that stocks had run up too fast, bond yields had fallen to far, arguing Fed policy wasn't tight enough and inflation due to the wealth channel would continue? Now it's the Fed is too tight look at the last two trading sessions. I thought part of the whole forward guidance thing was to let the market do the tightening or loosening for the Fed? Did conditions just all of a sudden get that tight following the jobs data or is it the confluence of jobs and BoJ?
Of course everyone knows all the answers when there is a sell-off, after all the people with all the answers have been predicting this sell off for (checks calendar)...well forever. Maybe people need to re-read Howard Mark's last memo "The Folly of Certainty"...hint - you don't know why this is happening and what will happen next.
If you want answers you have to consult the Oracle... of Omaha https://fs.blog/mr-market/ But he's been selling stocks and is sitting on billions of t-bills...and the "The Buffett Indicator" has been at over-sold levels. “The most that owners in the aggregate can earn between now and Judgment Day is what their business in the aggregate earns.” — Warren Buffett
Anyway, I'm sure you can find all the answers (everyone on the internet is now an expert in Yen carry trades) and the best market-timing strategies....on some other blog.
XTOD: In this time of extreme equity market pain it’s comforting to knew that Private Equity prices are largely unchanged. They win again. Many (not all, some are quite clear about their risk) don’t tell the truth, but again that’s a winning strategy and many of their clients (often also my clients) are complicit in the falsehood as it makes their life safer and easier even at a long term cost of lower ER than your true beta should earn and more risk in a possible long term bear than you thought you had (sorry, truth to power and all that, please don’t shoot the messenger). Congrats Ostriches.
XTOD: From 1928-2023 the S&P 500 experienced drawdowns of:10% or worse in 64% of all years 15% or worse in 40% of all years 20% or worse in 26% of all years Losses are normal https://awealthofcommonsense.com/2024/08/this-is-normal-2/
XTOD: I am beginning to wonder if the popular Sahm Rule is not just a predictor of recessions, but an amplifier of recessionary fears that can become self-fulfilling.
XTOD: When something feels like the top, trust your instinct https://pbs.twimg.com/media/GUPwz3iXYAAuAx2?format=jpg&name=900x900
XTOD: Yes, it's ugly out there, but this feels more like SVB exploding (taking down some regionals and shaking up the system) than 2008. I think this will be mostly forgotten next week.
XTOD: Nearly 33 years of (near) Zero Interest Rates (ZIRP) and 23 years of Quantitative Easing come at a price you eventually must pay. (Japan was always mentioned by the QE fools as a place where the strategy worked).
XTOD: The root of people pleasing is not concern for others. It's concern for approval. A fear of being disliked leads many people to put their image above their values. A good reputation is not about being adored by all. It’s about earning the respect of those who matter most.
https://x.com/CliffordAsness/status/1820449775805759626
https://x.com/awealthofcs/status/1820449547551654368
https://x.com/DavidBeckworth/status/1820430588748173513
https://x.com/litcapital/status/1820563451414270343
https://x.com/thelykeion/status/1820559529958166735
https://x.com/nntaleb/status/1820528854978474171
https://x.com/AdamMGrant/status/1820486762839658712
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