RE:Good Adviceretiredcf wrote: COMMENT
A Commentary
01/12/2022 at 07:00pm
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Investing Mistakes: Too Much Focus on Macro Issues. This year has been a challenge for stock pickers because companies do not matter now. It is all about inflation, interest rates and geopolitical events. There are debt-free companies with high margins and growth rates in the 70-per-cent range, yet their stocks are half, or less, of what they were seven months ago. Everyone worries about the macro picture, and no one cares about the companies. But guess what? You own part of a company when you buy its stock. You don’t own gross domestic product. You don’t own inflation. You don’t own interest rates. You own a company. Many companies will continue to grow and thrive despite the bad economic headlines. Don’t forget what you actually own.
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Stockchase Insights
This is generally good advice for the long term investor.
My strategy going into 2023 is to hold a larger cash position than I normally would to take advantage of any potential pullbacks. I'm going to begin buying stocks when I see the unemployment rise and real gdp begin to fall. How do I know the unemployment rate will rise? Well, Jerome Powell told everyone at the Jackson Hole meeting that unemployment will have to rise in order to reign in inflation. The analyst have not even projected lower earnings for 2023 and are assuming that inflation will correct itself without having a recession. I think this is wishful thinking.
I like long term duration bonds and believe they can outperform stocks in 2023. You never lose with bonds in a recessionary environment as interest rates come down. A portfolio that is weighed towards bonds and cash may be a prudent way to manage the expected turbulence for next year.