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Friday File: Reflection on the Berkshire & Markel Confabs, plus a few buys and sells in a wild week

Updates on WCC, IIPR, SHOP, SAND, ILMN and more... and maybe a new Lock Box candidate


What’s going on right now? Well, pretty much the same thing that has been going on for the past few months — inflation is raging and freaking out the Federal Reserve, which is getting more assertive in trying to slow the economy to slow that inflation, and for whatever reason the logjam was loosened a little this week, following the Fed’s (exactly as expected) interest rate hike, and we’re finally seeing rates move higher and stocks and bonds lower… which is just what the Fed needs as it tries to tame some of that speculative excess.

The reality of that settling in as the new driving narrative of the markets is causing some panic among investors, I guess, and they’re selling over the past couple days, trying to reconcile the fact that the economy is doing just fine other than inflation, with spending still strong and unemployment low, with the likelihood that it will take inflation a while to come down, particularly with the war in Ukraine and with Chinese lockdowns for COVID and rising wages in the US exacerbating what were already tight conditions in global supply chains, and pushing supply of a lot of products down faster than demand is likely to drop. I have no idea whether or not we’ll end up with the “soft landing” that everyone hopes for, when interest rates and inflation and unemployment all magically normalize without a bad recession, but, well, nobody else knows, either.

Risk is high, and investors are scared. Joining them in being scared probably won’t do you any good. If you’re worried about losing money that you need in the next five years, you have too much allocated to the stock market… if you can wait longer than five years before you need to spend that money, I think the odds are pretty good that this developing bear market will present us with plenty of opportunities. There’s no point in trying to pick the bottom or time purchases perfectly, but if there are great and solid companies whose prices have suddenly become genuinely reasonable for the first time in a couple years… well, maybe we can begin to think about buying them.

The volatility we’re seeing right now takes me back to the panicked moments around the time of the last election, so let me lean on that for a moment and ...

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