I read something the other day that blew my mind: no Wall St. sell-side research team has predicted since 2000 stocks would finish lower on the year. This seems unfathomable – unless you take into account the fact analysts are paid to transact business. Stocks finished lower in 2018. And 2008 – it happens. It’s trending that way to start the year, too. Apple disappointed and a second- and third-round of panic is setting in. The president Tweeted yesterday that a “glitch” caused the December swoon in equities – that and a wall, a shutdown, internecine White House fighting, a slowing economy.
Cryptos are lower but on a relative basis, they’re outperforming stocks. One day doesn’t make a trend, but after a decade of stocks going straight up, it’s fair to assume some young traders are getting a lesson in risk management. I have a buddy in the South who said his “long-only” hedge fund dropped 22% in the 4th quarter – by far the most dismal performance in the firms’ 6-year track record. They’re opening a fixed-income unit this spring to mitigate risks & diversify. You wonder if some of those diversification dollars won’t venture beyond bonds someday. We’ll see.
Nancy Pelosi is back as Speaker of the House. You can skip SNL for weekend humor because Trump-Pelosi will be can’t miss TV.