Breadth Thrusts & Bread Crusts: Playing Possum

JC Parets
September 15, 2022

From the desk of Willie Delwiche.

Something was getting into our grapes. 

That much we knew. We could see the evidence in the mess under our arbor every morning. Our dog was also aware of its presence. But we didn’t know exactly what “it” was – until Friday.

Rather than waiting patiently by the back screen door, the dog was crouched as if he was in starting blocks. He was ready to launch himself onto the scene.

He sprinted to the grape arbor, and after a brief glance at the vines, he raced along the fence. Within moments, he had his prey, shook it vigorously (as he has done in the past), and dropped a limp body. I walked over to get my first glimpse of the intruder. 

Laying motionless at the dog’s feet was a not insubstantial possum.

I congratulated the dog and went to work disposing of the body. On my way to grab a pair of gloves, my wife reminded me, “Willie, sometimes possums play possum.” Instead of a pair of gloves, I grabbed a long-handled shovel. I scooped up the body, pretty sure it was dead but not wanting to find out otherwise, and maneuvered it into a paper grocery bag. I put that inside yet another bag, scooped up the entire package and, keeping it four feet away from me, carried it on the end of my shovel into the alley.

If it was dead, I could deal with it in the morning. If it was alive, I certainly didn’t want to get too close.

When I checked Saturday morning, the bag was still there. 

“Dead,” I guessed. 

I was ready to wrap it in a plastic bag and drop it in a dumpster. What else can you do with a possum carcass in the city? 

I nudged the bag.

It was empty. 

I didn’t have a dead possum. But I did have a great story and a useful metaphor.

The stock market rally from mid-June to mid-August was a tremendous burst of life. Since then, as prices have retreated, macro issues have resurfaced and sentiment has soured. The rally has been given up for dead. 

Time will tell if that is the correct assessment. It really isn’t showing much life right now. but neither was that possum… 

If we undercut the June lows from a price and/or sentiment perspective, then it’s appropriate to conclude that the summer rally was more a function of a volatile environment than emerging strength. 

The possum, so to speak, would indeed be dead.

But it’s a very different story if the market shakes off the stun of the recent selling, holds above the June lows, and shows some improving breadth in the face of rising bond yields – even as the post-mortems are written. 

In that case, it would be fair to say our subject is just playing possum.

I don’t know which scenario will play out at this point – and I’m OK with that. I can adapt to either outcome and that is the most important feature. 

If it’s a carcass, we can dispose of it. But if it’s alive, I don’t want to get bitten.      

 

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