Going into Christmas, the herd was stampeding downhill. Following the holiday, the herd has
reversed course and is now on a moonshot trajectory (75 degree angle of ascent). The Fed was
brought under assault from many quarters for running too tight a monetary policy as the year
wore down and it relented on interest rate policy. One can argue that chair Powell had no genuine
theoretical premise for the policy of gradually but steadily raising short rates, and the Fed has
ceded control over rate setting to the demands of risk capital for now.
In my last post, I posited that the SPX had reached reasonable levels down at 2350 and I briefly
sketched out a rationale for saying 2650 was an OK fair value estimate for the 2019 - 2020
period. The post-Christmas spike low and moonshot rally is statistically suspect, but lo and
behold, the SPX has been running back up toward the 2650 level. I find this performance to be
astounding and the emotional roller coaster that market players have been on over the past 12 -
14 odd months to be something of a bad joke.
It would be comforting to me at least if investors began to pause in the weeks ahead to review
what they have wrought and to take stock in a calmer assessment of what uncertainties and
opportunities may lie ahead.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!