Ok, that question answers itself. Of course you have. We all have.
For our purposes today, I’m more specifically focused on the periods when we resist something that deep down we know would be good for us. Or the right thing to do. Or the intelligent thing to do. Or the helpful thing to do.
When nothing but goodness can result from taking a specific action, why do we resist it? Why do we willingly sabotage ourselves like that?
Author Steven Pressfield in his bestselling book “The War of Art” terms this “The Resistance”. Capital T, Capital R.
Another Santa Claus Rally is officially in the books.
This year the S&P500 rallied 0.80% during the period, which is more than 3 times the historical returns for all the other 7 day periods throughout the year.
When did the NYSE new highs list peak? When the dollar bottomed...
When did equities bottom? When the dollar rolled over...
It's not rocket science.
I don't care why it's the case because the correlations are so evident. It's a fundamental reality in this tape: A weak dollar is positive for stocks and crypto, while a strong dollar pressures those assets.
Now, consider: What have been the defensive assets in this market?
The Japanese yen? Nope.
Gold? Not until recently.
Bonds? Hell no.
Whenever shit's hit the fan, that money has flowed into the US dollar.
As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!
One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn't just end there.
We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
This morning, our analyst team was bouncing ideas around when I posed the group this question:
"It's the beginning of a new year. Do we want to continue buying strength (as we have been)? Or do we want to buy some well-selected dips on stocks in sectors we like?"
In other words, what's our appetite?
The prevailing sentiment that won out was that we have been buying strength -- and that has worked well in some areas, particularly homebuilders, Chinese stocks, and metals stocks. But the reward-to-risk opportunities right now may be more favorable in the "buy-the-dip" camp.
So with this in mind, let's take a look at a stock in the semiconductors sector that has our attention.
Doing some basic math, the odds continue to favor a strong year for stocks in 2023.
There are some people out there who think the Nasdaq is the stock market. There are others who "only buy growth stocks".
I don't know what kind of masochist you need to be to think that way, but both of those are very foolish approaches to life.
The Nasdaq is full of growth stocks. And growth stocks historically underperform and make little progress when interest rates are rising. I'm not sure if you heard, but interest rates have been rising!
Since the Stock Market bottomed in June, the majority of stocks and sectors are up and to the right. It's only the biggest losers that are down, and there aren't that many of them. It's really just those nasdaq / growthy stocks that the masochists are focused on.
From a seasonal perspective, Pre-election years are historically some of the most bullish years we have in the market. Here's what the 4-year cycle looks like as we head into 2023:
