Howard Marks Co-Chairman of Oaktree Capital Group recently stated, "blanket advice to buy or sell isn't very useful just as investors should be wary of sweeping generalizations about whether its time to buy or sell". This advice is excellent, so we will not attempt to make any dramatic calls on what the market will do in the short term.
What we will say is that it feels like we are getting closer to a bottom.
- Various long-term market strategists at Morgan Stanley, J.P. Morgan & Bank of America, to name just three, all of which have been very bearish are now softening their stance. In fact, they have publicly stated "it's not too early to start nibbling".
- The bear market is now nine months old & if you look out 6-9 months, which many long-term fundamental investors do, you can make a case for inflation coming down towards 4% or so, the Federal Reserve completing its rate hikes up to around 4.5% & the U.S. dollar reversing some of its dramatic 2022 rise.
- Federal Reserve Presidents such as Charles Evans of the Chicago Fed said, "he is feeling apprehensive about the Feds raising rates too quickly".
- CNBC states the "fear gauge" is hitting its highest level ever.
- New data from Arizent's Retirement Confidence Index shows investors' risk tolerance at an all-time low.
- Fox Business News asking "Will the Fed lead us into a Depression"?
- Central Banks all around the world are raising rates leading to a slowdown in economic activity.
History reflects a pattern of the stock market performance being negative in the year before an official recession, meaning equities could start rallying even as economic pain increases. Let's remember stocks are a long-term investment & while economic growth & corporate earnings will face downward pressure odds are they will recover in 2024 and beyond which supports our arguments for a rebound in stocks from today's levels.
Be well & don't hesitate to call if you want to discuss specifics about your portfolio.
Many thanks for your continued confidence and trust.