Juggling Dynamite

Perspective…

With reports that the city of Kyiv was soon to be closed off I decided the best thing to do was to join the crowds and leave for the border before being stuck. Whilst it was a sad to see the people leaving their homes behind and taking their kids and pets with them towards an uncertain future it also showed the best of the people. Spirits were high, nobody panicked, people shared food and drinks with each other. It was humbling to be a part of it.  I have made plenty of films in Ukraine and so I will be making a sizeable donation to help some people there. Here is a direct video link.

Ukraine President, Volodymyr Zelenskyy, recorded a message to the Russian people and asks bloggers and social media participants to help it be heard despite being blacked out of Russian state-run media.  Listen and share.

Here is a direct video link.

From their January 2021 peak, economically-sensitive small-cap stocks are down about 19%.  The NASDAQ is -17% from last November, and the average drawdown is 23% so far.  The S&P 500 has fallen just over 10%.  Canada’s TSX has held up better to date (-3.8% from November high) on its massive overweight in late-cycle favourites–financials (32%) and fossil fuels (13%).  This, too, shall pass.

As shown below, courtesy of Macro-ops and Bank of America, these bets were also notoriously misplaced at commodity price peaks in 2006, 2011 and 2018, before prices tumbled and demand and inflation bulls finally capitulated.

Inflation-protected-treasury bond flows (TIPS) have been retreating hard this month, as shown below courtesy of ISABELNET.com.

Those who think that the rapid stock rebound from March 2020 was typical are in for some tough schooling.  As shown below in my partner Cory Venable’s chart of the S&P 500 during the 2000 to 2003 bear market, counter-trend rebounds are par for the course, but buying early dips is a time-worn path to pain and suffering.  Patience and cash reap their rewards in due course.  Experience and price discipline always matter, in the end.