My thoughts on this market, and this year

It’s evident now that our companies were probably way overvalued a year ago. But it’s also clear that a lot of things have occurred that could not possibly have been anticipated or foreseen, all leading to the the wildly risk-off mentality in the market that we are seeing now.

These include the Covid pandemic, and having the pandemic cause container ships to pile up in a couple of closed-down Chinese ports, causing shortages of all kinds world-wide, leading to high inflation.

Then we have to add on a crazy, unexpected, Russian invasion of a neighboring country, leading to oil and gas shortages all across western Europe and adding to inflation.

And then having the Federal Reserve raising interest rates at a rate that hasn’t been seen in 40 years.

Complicated by the Federal Reserve talking as if a good economy and full employment is a bad thing that needs to be crushed by further interest hikes, instead of a good one, which has brought about a fear of the Fed bringing about a recession.

We couldn’t have anticipated any of this .

And certainly not all these things hitting simultaneously, a pandemic, container ships unavailable, shortages, a Russian invasion, inflation, and interest rates being pushed up at an almost unprecedented rate, the fear of a recession.

Do any of you believe we would have seen this incredible rapid drop in our stock prices if all of these hadn’t hit, and hit simultaneously?

Bringing us to the current situation where our companies are as undervalued as they were overvalued before. It’s a crazy world.

And add on to that the question of How Do You Know WHEN to sell out?

Let’s look for a minute at 2020 .

Covid arrived in late Feb of 2020, and by Mar 16, my portfolio was down to 84% of what I had started the year with. (down 16%)

A month later , on Apr 17, it was at 129% of what I had started with. It had risen 53% (from 84%), in a month.

Surely that meant I should sell out and take profits.

A single month after that , on May 15, it was at 161% of what I had started with.

That meant it was up 92% in two months! Up 92% in two months!!! Surely that meant that any sane person should get out and take their money off the table.

However, I ended the year at 333% of what I started the year with (up 233%).

If I had exited in May , after that “insane run-up" when any sane person would have, I would have missed 172 percentage points of gain that year!!!

In mid-Nov of the next year , 2021, I was up 93%. That means an almost doubling of that 333% that I had at the end of 2020. I was at 333 x 1.93 = 643% of what I started 2020 with.

If I had sold out on May 15, 2020, when any sane person would have, I would have left 643 minus 161 equals 482 percentage points on the table.

If you think you can predict all that , the rise, the pandemic, the container ships, the war, the inflation, the interest rate rises, the fear of a recession, etc, more power to you. I sure can’t. So I just stay with high confidence companies, and I don’t try to time the market. As Bear just pointed out, timing the market just isn’t something you should try to learn from this.

This too will pass!!!



I’ve been reflecting on the last year. I’m sure that I am not alone when I note that 2022 has been nothing short of disastrous for my portfolio. This is not the place to discuss the erosion in my net worth and the stress that has subsequently been imposed on my personal financial position. So, I will simply leave it at that.

However, I would like to highlight your closing remark, " Bringing us to the current situation where our companies are as undervalued as they were overvalued before.

I’m not sure folks realize the importance of that observation. As we all know, growth is typically measured by comparing the current financial performance reported by a company with similar metrics from the prior year and quarter.

Many of the companies we follow have not been postured to report comps that will be viewed as extraordinary as they will report upon exiting the current downturn.

As you noted, timing the market is a fool’s errand. Will we see those amazing comps in 2023? We can only hope so. We have not officially even entered a recession though many analysts seem to think one is already underway.

But, we do know that past experience with bear markets is that they usually last about 9 - 10 months. According to the Google machine, the longest bear market since 1929 was 21 months. Typically, the market anticipates economic swings about 6 months in advance. Given those stats, I will stick my neck out and predict a full swing around the middle of the year, though it’s likely that we’ll see some bounces and retractions before then. Today, Jan 9 looks like a bounce so far. We’ll see what tomorrow brings . . .