As always, this is not investment advice! Please do your own due diligence and take your own financial situation into account. Everyone has a different financial situation, which means different tolerances for risk and ability to take risk. What is appropriate for me may not be appropriate for you.
Between Pelosi’s visit to Taiwan at the beginning of the month and the Fed’s recent (and continued) hawkish commentary towards the end, August felt like an eternity.
A lot seems to have happened, but I’m not quite sure yet if anything has changed…
We still seem to be on the same train going in a nightmare loop. Not sure when we will break free.
The cautious investor optimism that began building in June and July sharply reversed during August as optimism about peaking inflation collided with conflicting datapoints that suggested maybe not?
And recently the Fed certainly brought home the point that they are taking inflation very seriously and are very willing to sacrifice economic growth to make it happen.
On the other side of the world, Europe and China both face significant challenges as domestic energy and economic / Covid policies take their toll, respectively.
A lot has happened…but it still seems very similar to the state of the world a month ago:
Inflation is high, interest rates are rising, global economic growth is slowing, and politics and geopolitics are a mess (and likely not getting better).
Maybe things can keep deteriorating, but eventually the state of the world will improve (or at least not get worse). Not sure when, but I’m an optimist. I’m optimistic it will eventually turn because it is not in human nature to give up in totality. Every crisis forces us to find a way.
For the month of August, the Paper Portfolio returned -0.75% vs the SPY’s -4.08%. There was significant dispersion in the portfolio, especially for companies with earnings. But in this environment, it’s hard to tell how well the market is pricing in fundamental developments, both good and bad.
Let’s see what September (and the latter months of this year) brings as we head towards mid-term elections, a cold winter in Europe, and China’s Party Congress in October.
Disclosures: Of the stocks mentioned, I own shares in NET, SE, PINS, KIND, MRNA, OKTA, SDGR, U, UBER, and AYX. I may transact in shares mentioned in the next 48 hours.