'Tis Only My Opinion!™
May 2022 -
Volume 42, Number 5
Batten down the hatches!
The U.S. stock markets did not have a
good positive performance in April 2022 as every attempt to
rally found a quick way to lose momentum. The economy in the 1st
quarter turned negative and the FED decided to increase interest
rates and reduce its balance sheet at a faster rate than
previously expected.
Now that is a formula for a major economic
downturn if I ever saw one.
As a result, the markets undercut the
previous lows and major support is now a couple of thousand points
lower for the NASDAQ at about 10500. For the S&P 500, major
support is almost a thousand points lower at the 3400 level.
Not a good combination for an over-heated
market whose valuations were rich by almost any measure. The FANG
stocks were showing lower results for the year as shown in the
following table and were significantly below their highs.
With the market still showing relatively
high P/E ratios, mymain worry is whether a liquidation event could
drop the market quickly well below the next support levels.
Although some investors might look at bonds
and/or savings accounts for yield and profits at this time, remember
that cash is a position as is gold, silver and other commodities.
Real estate is also questionable as rates and taxes increase.
In this market, certain investors
(speculators?) might play the short positions in futures but it is
possible that those bets could be rendered useless by margin calls
when the big boys change the rules to protect themselves.
Personally, I will stay clear of the crypto
illusions and wait for the smoke to clear from the coming storm and
conflagration.
Remember to:
Keep It Safe, Simple and Stay Focused!
But then 'Tis Only My Opinion!
Fred Richards
May 1, 2022
www.adrich.com
www.strategicinvesting.com
Corruptisima republica plurimae leges. [The
more corrupt a republic, the more laws.] -- Tacitus, Annals III 27
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