In the middle of another bear-market rally, I am reminded that nothing has changed, and the macro environment is still decisively bearish. And nothing is likely to change anytime soon. So, rather than “building your buy list”, stop fighting the overwhelming trends and use short ETFs to make money during the bear. The time to start buying is at least a few months down the road.
Talk of near-term shocks to the overall markets has increased of late. Even though stocks have risen recently, it has only been a week or so since we last bottomed out and treasury rates continue to rise to levels we haven’t seen in 20 years. Some even expect the treasury market to crack.
I have learned time and again that picking individual stocks is difficult. Even my recent winners, like AT&T (T), are still losers (I bought at 18.5). Maybe you are good at it and managed to switch to energy stocks at the beginning of the year and are riding high. If not, if you are like me, best to ride the macro landscape with funds or ETFs that follow the expected trends.
Stock Picking or ETFs?
Most of my money is in money market funds, some of which are now yielding almost 3%. The yield has risen slowly and consistently since the fed started its rate hiking cycle and will continue to do so until they stop. Some “experts” say, oh you are losing to inflation by keeping your money in cash. Maybe, but I am beating the stock market, the treasury market and any other market available. The only way to do better is to go short.
Big earnings reports are due this week with the tech giants all reporting. I do expect disappointments; however, even if Apple, Microsoft, Google, Meta, etc. all beat expectations, that will only reinforce my conviction that the economy is doing fine, rate hike effects haven’t shown up and that they will continue. Pundits call these things “lagging indicators” and they are correct. Nobody really knows what is happening in aggregate right this moment and certainly not into the future. But my own experience tells me don’t fight the fed.
I’m sorry to keep beating the same drum, and I, too, am tired of the same old trades, but as this bear-market rally continues, build your short position back up. Shorts and leveraged shorts are still the best trade in this market.