Market Musings 120622:
Charts to muse over
Sometimes, indeed often, the best thing that an investor can do is NOTHING, repeat, NOTHING. Patience is probably the most underrated quality a successful investor requires.
Summary:
- US retail investors have sold their stocks bought since mid-2020
- Cryptocurrency implosion
- One reason Crude Oil, Oil Products and Natural Gas prices are so high today is long-term lack of investment
- Small-cap stocks start to look cheap
- Idea of the week: TDGB VanEck Morningstar Developed Market Dividend Leaders ETF (London-listed)
This week’s Podcast - What reasons are there to be cheerful?
What reasons are there to be cheerful? (link)
- Is a global recession looming?
- Are all the recession indicators flashing red?
- Has inflation already peaked?
- What is still driving the economy and financial markets?
- How can investors navigate this period?
Charts to muse over:
1. US retail investors have sold their stocks bought since mid-2020
According to Goldman Sachs, US retail investors have now sold down the stocks they bought since the March 2020 stock market low.
As you can see from the chart, this coincides with the crash in “Retail Favourite” stocks relative to the S&P 500, to the point where they have underperformed the broad index since March 2020.
Source: Goldman Sachs
However, as greed turns to fear, the pendulum has a habit of swinging too far in the opposite direction. This is no guarantee that the current stock market fall is over.
The TD Ameritrade Investor Sentiment index of their retail client buys and sells suggests that the selling can continue, as we are still some way off the pessimistic lows hit in March 2020.
TD Ameritrade IMX Investor Sentiment Index Continues to Fall
Source:TD Ameritrade
2. Cryptocurrency implosion
As growth stocks, exemplified by the Nasdaq index, continue to fall, cryptocurrencies are falling back to Earth in the wake of recent scandals involving cryptocurrencies Terra and Luna. Note, however, that they have still a way to go if they are to return to their late 2020 levels.
This also exemplifies the pain being suffered now by many (younger) retail invetors.
Bitcoin, Ethereum and Dogecoin in free-fall
Source:tradingview.com
3. One reason Crude Oil, Oil Products and Natural Gas prices are so high today is long-term lack of investment
In commodities, the…
