Crosscurrents

Disclaimer: This is not investment advice, nor is it a recommendation to buy or sell shares in the company/companies mentioned.

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The information contained herein is accurate to the best of the author’s knowledge, but the material and interpretations contained herein should be independently verified by any party using this information as part of any research, editorial, or decision making process. Any views expressed here represent the author’s opinion only, and as such readers should do their own research and come to their own conclusions if they are using the opinions contained herein as part of any larger due diligence process. The author may have long or short positions in the companies mentioned and may be buying or selling in the market depending on which way the wind is blowing at any given moment. Opinions are subject to change without notice. Prospective resources, predictions, comparisons, financial projections, and extrapolated metrics are, by their nature, subjective and interpretation dependent. The topics covered are highly speculative and involve a high degree of uncertainty and risk. Speculative companies can and do go to zero. By using this site, you agree that the author(s) and Hydra Capital is/are not responsible for any damages incurred by the use of the presented materials. Anyone reading these blog posts should know that they are the author’s thoughts and opinions, which are not to be confused with or construed as research reports.

Disclosure: The following represents my opinions only. I am long AAV.TO, AOI.TO ARX.TO, CRE.V, EOG.V, ITE.TO, GOT.V, LAC.TO, PNRL.V, SWN.US, TAO.V, TNZ.TO, CCO.TO, NXE.TO, DML.TO, GLO.TO, CVV.V, EFR.TO, U.UN.TO, and XYZ.V (Image credit to Christoffer Engstrom on Unsplash)

I’ve been quiet, but it hasn’t been because I suddenly lost interest in the market — I just haven’t had anything new to say since I battened down the hatches in early July, focussing on a narrower selection of companies that I felt could perform regardless of what “the market” did. Very little has changed in my outlook, or holdings for that matter, as the market gyrates between headlines. There are so many crosscurrents in the market right now that, for me, the day-to-day happenings are blending together into a kind of noise. Worries about inflation, central bank rates, recession, the bond market, energy prices, energy supply, food supply, Russia-Ukraine, climate goals, and China’s zero covid stance generally dominate the news. Of all of that, if there’s one thing that the market seems to be most fixated on, it’s the Fed… look no further than Wednesday’s market action for confirmation of that. I’m not sure that’s the most productive of fixations, because if it’s simply “rates up = stocks down” and vice-versa, then historical stock market performance must be a perfect reflection of the fed funds rate, right? Nope. Not even close. If it were only that easy. Coming out of the 2020 lows, the indexes were consistently bid because of TINA (There Is No Alternative (to equities)) thinking under the umbrella of negative-to-zero-yield bond market. Now, the bond market has started to price in higher interest rates, which directly impacts risk appetite, certain kinds of business activity, and funds flows (as known as “the tide”). As a result, I think we are in a stock (or sector) picker’s market. There’s always a party somewhere, but investors better know what they own and why they own it, because only the best stories (or sectors) can attract and hold attention when “the market” isn’t cool.

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