I Was Wrong

My head has been spinning this week. I definitely did not see the Fed discussing rate cuts in 2024. Was that the “pivot” the world has been hoping for all year? I don’t know. And frankly, I don’t care. We came into the Fed meeting with the spirit of our portfolios intact since early November. A few changes at the margin here and there. I thought there could be a 1-2% pullback between Thanksgiving and today as it is a seasonally weak time of year. If that came it would be yet another buying opportunity, but I offered that I would not try and be cute in playing it.

Instead we got several face ripping rallies that has left the bears mauled and slaughtered. I cannot imagine being so negative all year and praying and hoping for demise, only to be crushed by the Fed. You know my philosophy. It’s more than okay to be wrong. It’s not okay to stay wrong.

As many of you know I keep a fairly detailed trading notebook that travels everywhere with me. I am always writing things down. I hear things. Someone offers a “hot” stock tip. Pundits stake their claims. Well this week, I heard one pundit who has been negative for 18 months throw in the towel and say that the rally this week has been “awesome” and he’s been buying. A good friend who has been bearish since summer 2022 told me he stopped writing negative things this week because he can’t take the criticism anymore. In the markets, the most shorted stocks have been soaring as it looks like the bears are finally throwing in the towel. I cannot believe it has taken this long and this much carnage. Many people are going to lose their jobs in early 2024.

This is the time of year when annual forecasts begin to get published. And I am working on mine too. Someone congratulated me because he said my forecasts always seem to work out. I literally laughed out loud. While it was a very nice compliment it is hardly true. And I am not embarrassed to remind people that my all-time worst call was in 2002. Stocks were down in 2000 after the Dotcom bubble burst. 9/11 hit in 2001 and I forecast that the stock market would bottom in March 2002 and end the year higher by double digits. As you can see below that did not work out so well for me.

I have no problem being wrong. While I may have an ego in my non-work life, I don’t have one when it comes to the markets. I really enjoy my annual Fearless Forecast. It’s fun to write. And most important, we do not manage money according to it so there are no financial consequences. We do, however, religiously follow our quantitative models when managing portfolios, even when they make me scratch my head which happened several times in 2022!

Remember when I kept a tab running on the number of weekends with rain since last June? Well, Ma Nature seems to have moved the rain from Saturday to Sunday/Monday and is really “raining” on my ski parade. Freeze, thaw, rain. Rinse and repeat. That’s what they should call winter in Vermont this decade. It’s just so unfair and really not nice. And here we go yet again. At least we got a few nice days in already, like last Saturday. Soft snow. Temps in the 30s.

On Wednesday we bought RYPMX, PMPIX and more MOS. On Thursday we sold some levered NDX.