- That's the chip sector - down 24% in three months.
- That's the Magnificent 7 - oblivious - so far...
- That's the 10-Year Note Rate - DESPITE what the Fed does and, no, it is not being rejected at 5% - it is consolidating for a move higher!
- This is how much larger the Stock Market is than the GDP it inhabits.
Our last Portfolio Review was on Aug 18th with the S&P at 7,745 and we're down 1.6% for the month - nothing to panic about as we were up 2.666% from July but this is a market that LOOKS good - but certainly does not FEEL good. And now they are messing with the goose that lays the golden eggs. AI has driven the markets for the past two years - a 40% run from 5,500 in Sept of 2024 but more over 50% from April of 2025.
I have gone on and on about how dangerous the concentration of wealth is - both in the general population and in the markets and, at some point, we'll see how it unwinds and I would LOVE to cash out now and wait - but I did that in 1998 and I watched the Nasdaq climb another 100% in 1999 and I regretted it.
Lesson learned and we called a perfect top in 2008 (after a year of warnings!) and we called a perfect bottom in March of 2009 - so an extra decade of experience was helpful and PSW has made it's reputation calling near-perfect tops and bottoms since - but this is shaping up to be the next MAJOR correction - hopefully another 15 years of experience will have us well-prepared for what happens next.
As it stands now, we have our hedges and we have our cash and I don't expect more than a 20% correction so, if we have $100 now and the market drops 20% and we have $80 but our hedges pay us $10, then we have $90 and we're ready to buy stocks that only cost $80 - so we get to buy 12.5% MORE stocks than we could have bought at $100.
