Market Overview

End of the World? Stock Market (and Sentiment Results)…

I know in NYC (Wall Street) the last few weeks feels like the end of the world, but the picture above tells a different story…

I’m writing this from Portugal this week – as we had a trip planned months ago to visit Lisbon, Algarve and Sintra. Being in this game long enough – you come to understand that the market and your positions will only go in one direction (down) the minute you go on vacation! If you work in the business you are chuckling as you read this. By the time your flight lands on the home tarmac the selling pressure is over and markets recover leaving you with not a thing to do. Pain when you want to golf, pleasure when you want to work. God has a sense of humor…

Sometimes it’s nice to leave NYC and CT to get some perspective. In summary, no one cares about the markets outside of Wall Street! They are living their lives in the sunshine (I guess knowing that sooner or later good companies resolve to the upside). Okay, that’s my commentary! But in all seriousness, the time difference is ideal. Get in 18 holes before the market open, work, then family time for the rest of the day. Rinse and repeat.

As I keep a pulse on the markets, it is apparent that things have gotten stretched to the downside and that a reversal is in sight. If you’re trying to pin it to the day, I land in Newark on Sunday!

Yahoo! Finance

I just reviewed the interview I did for Yahoo! Finance on Thursday afternoon before I departed on Friday – and despite the selling pressure in recent sessions, nothing has changed with our outlook. Thanks to Taylor Clothier, Conor Hickey, and Hayley Marks for having me on Yahoo Finance with Julie Hyman and Josh Lipton:

MoneyShow “Inside Alternatives”

Today I joined the MoneyShow’s special virtual segment on Alternative Asset Managers. Thanks to Debbie Osborne for having me on:

Here were my notes ahead of the session. You’ll see that the host took it in a spontaneous direction:

*Please tell our audience a little bit about your firm and your investment strategy.

*The low interest rate environment of the last 15 years favored long-duration assets like bonds and growth stocks while challenging many value strategies. Eighteen months ago, everything changed—and dramatically so. How has the advent of inflation and a new central bank regime influenced your investments.

  • Ali and Tom, both of you are in Europe. Is the outlook any different there?
  • Do you expect a U.S. recession?

*Please elaborate upon how you view the market opportunity set over the next 1-3 years. Where do you the biggest opportunities and the most worrisome red flags?

*Shorting stocks is one of the more challenging undertakings in investing, but it can be very profitable. How would you describe your short selling philosophy? Are there any specific traits or characteristics you look for or screen for?

Some sectors ranging from banks to biotechs tend to move fairly closely together. Do you typically favor going long or short individual companies or entire sectors?

*Looking out over the next three to five years, what do think will be the biggest surprise for mainstream investors?

Burdened By the Facts

PEG ratio: Mega-cap tech vs. median S&P 500 stock

S&P 500 vs its seasonal pattern

Sign of Panic Creeps Up

Change in 10-year Treasury yields

The rise in yields has reached the relentless stage

S&P 500 Index

Equity sentiment was unchanged for a second consecutive month

From @SethGolden on Twitter: “All we hear is savings rate and excess savings falling, consumer stressed more so than ever with repayment of student loans kicking in again October… and yet from Q2 to Q3 Household net assets value climbed ~$6trn while liabilities only climbed ~$500bn… with Equity and Bond market prices lower.”

Consumer finances / Consumer balance sheet

Now onto the shorter term view for the General Market:

In this week’s AAII Sentiment Survey result, Bullish Percent (Video Explanation) rose to 30.1% from 27.8% the previous week. Bearish Percent moved up to 41.6% from 40.9%. Retail investors are fearful.

Sentiment Survey Historical Data

AAII Bulls

The CNN “Fear and Greed” dropped from 25 last week to 19 this week. Investors are fearful. You can learn how this indicator is calculated and how it works here: (Video Explanation)

Fear & Greed Index

US – CNN Fear and Greed Index

And finally, the NAAIM (National Association of Active Investment Managers Index) (Video Explanation) dropped to 43.01% this week from 54.33% equity exposure last week. When the tide turns, the “end of year chase” will be on full force.

NAAIM Exposure Index

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