At this point, you’ve probably read at least a dozen headlines explaining that the first half of 2022 is the worst for the market in over 50 years. The headlines and commentary we’re seeing are apoplectic. This came from Barron‘s last night:
The first half of the year was terrible. Worst in decades for stocks. Way worse than anyone would have predicted at the start of the year.
Arguably the biggest single cause of the misery was the spike in oil prices. Russia’s invasion of Ukraine accelerated a rise that was already building as the world emerged from the pandemic. The onset of the worst inflation in living memory that followed kicked the Federal Reserve and other central banks into action with hyperaggressive interest-rate hikes.
They’re right. The S&P 500 is down over 20% in the first half of the year. The NASDAQ is down almost 30% so far. And every single industry sector is down on the year except for energy which of course, includes oil.
The Federal Reserve is way behind the curve having waited so long to raise rates that they’re doing exactly that into a recession. The big banks and sell-side are hopelessly behind, and their counsel is either useless, harmful to clients, or just running half a year behind Deep Knowledge Investing.
None of this takes into account the fact that earnings estimates for the S&P 500 haven’t come down yet (and definitely need to do so).
We haven’t been perfect. Despite great fundamental results, Coursera’s stock has traded down this year. And despite great potential, Las Vegas Sands is still hurting from China’s 2 1/2 year long zero-covid policy. However, we advised our subscribers to prepare for inflation back in November of last year and suggested they buy oil. We told subscribers to short the S&P 500 and the NASDAQ in early January. And we called stagflation in February.
The two big calls to be made in the first half of this year (owning energy and shorting the market) are the ones we got right. If you’re reading our work, you’re 4-7 months ahead of the big Wall Street banks. Independent conflict-free research matters. The market might be “terrible” for everyone else. Please don’t feel helpless or that you don’t have good investment options. We’re here for you.
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