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Momentum Monday - Watch What I Do Not What I say and 2022 was Brutal for Most Stocks
Howard Lindzon
December 27, 2022
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Good morning...I hope everyone enjoyed the Christmas long weekend.
Now a return to regular programming which includes losing your nest egg!
The year 2022 was one of the worst I can recall for stocks, especially the stocks that brought me my gains and joy since 2010. The year made me feel dumb.
This is the last Momentum Monday of 2022. As always, Ivanhoff and I tour the markets and this week we found nothing to get excited about unless you care for silver and defense stocks. I shared a bunch of charts that are worth seeing that continue to keepo me on the sidelines. You can watch or listen to the show right here on YouTube. Please subscribe so you get an alert each week from YouTube.
The continued negative sentiment is the one bright spot I see for the market, but as my technical expert and friend Krinsky says , retail investors continue to talk bearish, but act bullish...
Here are Ivanhoff’s thoughts...
Most central banks around the world are likely to remain in tightening mode into the first half of 2023. Even the Bank of Japan is joining the chorus, which helped to send interest rates higher last week. When money managers expect a recession, most can hide in Treasuries. This is not working this year. TLT has been absolutely demolished serving the 60/40 portfolios one of their worst years in history. After a brief bounce in November, TLT is down again. When the cost of money is rising, many new and existing projects don’t get funded, and most stocks are worth less. This is the environment that awaits us in the foreseeable future. The question is how much of that has already been discounted. Markets tend to overshoot anyway. This is what creates opportunities.
Even if 2023 is similar to 2022, there will be plenty of opportunities on the long side. Bear markets are often interrupted by violent counter-trend rallies. In 2022, we saw three major bear market rallies varying between 12% and 20% in a few weeks. Plenty of stocks went up 50% to 100% during those rallies. Each of those bounces was led by a different set of stocks. In February/March, energy names stood out. In July/August, biotechs outperformed. In October/November, Chinese and semiconductor stocks made huge upside moves. After every one of those rallies, the indexes made a lower high and the bear market resumed. Every single time, the move lower was led by tech stocks. At some point, the trend of lower highs will end and a new bull market will begin. It always does. In other words, there’s nothing to be afraid of in 2023. There will be plenty of opportunities on both the long and the short side.
I wanted to share a few more charts (I discussed most of these in the video with Ivanhoff)to lend some perspective to this moment in time for stocks and to offer some context on what bear markets have looked like in the past. They are JUST charts and not predictions.
I am including a link for the one above on bear markets for closer examining.
As I was saying...2022 was brutal and 2023 will not be easy. I have been in preservation of capital mode and hope for what seems like an eternity and hope I helped you a little bit this year.
I expect better opportunities at some point in 2023.
Have a great week.
Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.
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