3,840 Friday – Ending the Year With a Whimper

37
668

Down we go again.

SPX Dec 30 2022

As I have said to our Members, these low-volume holiday moves are meaningless but what is meainingFUL is the 20% drop for the year on the S&P 500 and the even more pathetic 33% drop for the year on the Nasdaq 100.  Yet a lot of you out there like to pretend things are OK and, JUST BECAUSE WE’RE TURNING A PAGE ON A CALENDAR, things will magically improve starting Tuesday.  This is the very definition of wishful thinking…

NDX Dec 30 2022

As you can see on the Nasdaq chart above, we never thought the index should have been at 16,500 in the first place and that’s why we gave the Nasdaq such a harsh range for 2022.  We discussed in yesterday’s Report how I felt the valuations were insane last year and we were shorting the market into 2022 based on those valuations plus I was the only person still worried about Covid at the time.

Now that valuations are a bit more realistic, we have a Watch List (see Wednesday’s Report) with over 100 stocks we think will hold up in 2023 and 2024 DESPITE the potential Recession and continuing Covid.  Oh and DESPITE the Higher Interest Rates, Global Debt, Inflation, the War, Europe’s Energy Crisis (caused by the War), continuing Supply Chain Issues, Faltering Democracies, Global Warming, Commercial and Residential Real Estate Collapses and the Mass Extinction Event we’re only at the beginning of.  

Graeme MacKay on Twitter: "The third wave. Revised & authorized.  #pandemia #ClimateEmergency #ClimateChange https://t.co/DPrQpK9FhG" /  TwitterNeedless to say, we’re not exactly in a hurry to buy stocks – even the ones on our watch list.  Still, there is a point, even if the World is ending, that we do find certain stocks attractive.  For example, if Covid mutates and kills 90% of the people on the planet that would solve the climate problem and, assuming you are a survivor – you are going to wake up in the morning hungry and you’ll want to work out some kind of system with your remaining neighbors by which some of them produce food while others make clothes and others figure out how to get IPhones working again, etc.  

So, even in a worst-case scenario, we like AAPL, we like T, we like LEVI, we like MCD – what are the things people are going to prioritize – even if things do fall apart?  Those are the great stocks to buy when they are on sale – as they do just fine in a good economy as well.  

calving and hobbes lemonade stand comic american economy subsidized Subsidies [Comic Strip]

That’s why we’re long on Natural Gas (/NG) again at $4.50 – we think people like to be warm and the Groundhog did not call for an early spring yet (but next week will be extra warm in the US, so we have to be patient).  

One year ago today, we had 301,472 new Covid cases and 1,207 people died of Covid on Dec 29th.  Yesterday the US reported 58,354 new cases and 355 deaths – so we’re MUCH better off than we were last year and my main concern is China and, hopefully, we’ve built up enough herd immunity that it won’t spread back to us – hopefully.  

Covid Dec 30 2022Still, we can’t put our heads in the sand.  Japan is having 170,000 new cases per day, 66,000 in South Korea, 27,000 in France, 30,000 in Germany, 20,000 in Italy, 30,000 in Brazil and China isn’t even reporting their cases and don’t get all holier than though with China as you KNOW most US cases are no longer reported either.  

With all these cross-currents, we’re mostly waiting to hear what companies have to say in their Jan/Feb earnings reports and THEN we’ll see who’s standing up best in the current economy.  Don’t forget the US Government still might shut down – that’s a nasty wild-card as well.  

Whatever does happen in 2023, we’ll make our adjustments and weather the storm – just like we always do.  

HERE’S WISHING YOU AND YOUR FAMILY A HAPPY, HEALTHY AND PROSPEROOUS 2023, 

– PHIL

My resolution is to see Randy live next year:  

 

Subscribe
Notify of
37 Comments
Inline Feedbacks
View all comments

Good Morning.

A Happy and Healthy 2023 to you Phil and the PSW family! 🙂

I too, would like to see Randy live next year! 😉

My comment was more the thought of self preservation, not actually seeing a puppet live… 🙂

I’d travel to D.C. if I need to see ’em!

Perhaps you can visit your brother and a ‘real’ Randy in San Diego in 2023? Oddly enough, the whole ‘woke’ thing seems to be rare sighting in So.Cal. where most do their best to ‘keep it real’ 

St. Geoge Carlin kept it real. A dose might actually lead to a cure…that or a spouse and children…. 😉

‘George’

Oh, I dunno, I think he deserves to be canonized.

A Happy and Healthy New Year to you Phil and all of the PSW family!

Looking for your thoughts here. If I roll SOFI $5 call option expiring Jan-2024 with a strike price of $5 (triggers loss) to the SOFI $4 call option for Jan-2025 does that consider wash sale?

Phil,
Like the idea of becoming a business. Would even make your subscription fee tax deductible?

I was thinking as long as it isn’t the same strike and expiry, one should be safe. I did some googling and here is a resource I found for individuals. It would seem that the Treasury hasn’t issued regulations or guidance on what is a similar option: https://fairmark.com/investment-taxation/capital-gain/wash/wash-sales-and-options/

“Until the Treasury decides to issue regulations or other guidance, neither I nor anyone else can say exactly how the wash sale rule applies to losses on options. But there’s a pretty good rule of thumb that should tell you when you’re safe and when you’re on thin ice. If the positions you acquired within the wash sale period permit you to participate in the same up and down market swings as the position that produced the loss, there’s a chance the IRS will say you have a wash sale. If that’s not the case, you should be safe.”

Phil,
Will you be doing episode 5/360 of how to become a millionaire, before the holiday?

Phil,
Can I go ahead and do that, or do you think it might change next week?

Hi Phil, In the last webinar you spoke extremely highly of BXMT as a dividend play. 41% of their portfolio is office space. (The good news is 92% of that is Class A.) Given the oncoming recession, and the tremendous office vacancy rates that we already are seeing due to the shift so many employees have made to working from home, does this worry you with regard to BXMT? Or do you feel that these concerns are pretty much baked in? You did not address this issue in the webinar and any thoughts you have would be appreciated. Thanks.

You would think office space is (and should be) a vanishing institution, but anecdotally, my son has a job that is perfect for WfH – but his higher-ups keep pushing for more time at the office. He’s a financial crime investigator, works for major banks, mostly does anti-money laundering these days. A perfect at-home job, but management wants people in those office buildings.

I have had the opposite experience. My firm has gone to mostly remote. We go into the office once a month. The feeling is that when we go in, there should be a purpose as well. We have done some team building events, packed food for Feed My Starving Children, went to an NFL summer practice exhibition, played golf, participated in a Happy Hour in an Adult Arcade where there Go Kart racing and Axe throwing. We have signed a new lease at our building that cut the rental space by 65%. It would be nice if we could participate in the real estate expense savings. I do not think we are going back. I like it and ironically find some of my best work experiences have been at these outings. This functioning introvert likes the arrangement. 

Good morning Phil,

Coming back after a long break…looks like the website has changed a lot. Where can I seeu account and start my subscription?

It feels great to be back to one of the top genuine source of news and loads of it.

Wish you a great year ahead.

Regards