What’s Next? — Sometimes, when I reflect back on the last two years or so, I’m flabbergasted at the chain of events that brought us to July of 2022.
If there’s one thing I think many of us have learned to live with, it’s volatility, particularly when it comes to news.
We’ve watched a lot of buying and selling of the news, more so than I have seen in another decade of closely following markets.
One has to wonder: can this possibly persist, or will there be a logical return towards some nominal mean?
When I say a return towards the mean, I mean less of a focus on emotion surrounding news and more of an emphasis on fundamentals, profits, and performance.
In the words of Michael Burry, “The preference, always, would be to buy a long-term franchise at a substantial discount from growing intrinsic value.”
It would appear that hype has outperformed intrinsic value growth lately.
When I still see 11-year-olds becoming overnight millionaires, celebrities pumping NFTs, or Tom Brady flamethrower-ing in an FTX commercial, I don’t think we have bottomed just yet. It does, however, scream that there’s a hype bubble.
With some of the juiciest names from the last couple of years down one- to two-thirds of their market cap in the last six months, there are some deals out there.
There are also some losers who won’t experience the same growth until the Fed has tamed inflation and makes cheap money available like a drunken sailor.
In the short term, I’m thinking defensively. Some call it wealth preservation. You do you, though.
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