Market Moment
By Hightower Bellevue on August 5, 2022
Randy’s Weekly Market Moment – August 5, 2022
Why Waiting on Mr. Market is a Mistake!
Everyone attempts to predict the end of the bear market. I have read at least six or seven opinions from Wall Street firms this week, and all have differing scenarios for the direction of the equity markets and predictions on when this bear-market cycle will end. Those who continue to wait for clear signs that the bear market is over could be waiting a while longer. For those who think the market will sell off and retest the lows, they also might be waiting a while longer. The real answer is, no one knows if this rally has run its course and stocks will head lower. In Wall Street parlance, this would be called a “head fake.” Mr. Market doesn’t provide any clues either. Recall, Mr. Market wants you to believe the bear market won’t end for a very long time, and he also wants you to think it certainly cannot be over yet. After all, there remains a lot of negative news on inflation, the economy, the war in Ukraine, supply-chain issues, China’s COVID lockdown, and then the Federal Reserve continues to hike interest rates.
As I’ve stated here before, typical bear-market cycles last about 14–16 months on average, and stocks turn up halfway through the downturn, which means we are in the 7th or 8th inning of this selloff. Could stocks turn lower? Yes, of course. The real insight here is if you have a long- term time horizon, now is a great time to add to your equity positions. Stocks are on sale, and they will recover and should do so nicely over the next one to two years, if not before. Will it be a straight ride up? Doubtful, but no one knows. I do know the bull market will return when you least expect it and will take the market to levels almost no one thought possible today. Be aware, Mr. Market is trying to convince you the market will never recover its recent losses, and you would be a fool to stay invested, let alone look even more silly buying stocks at these levels. Smart investors are turning the table on Mr. Market, adding to their portfolios rather than running away.
It was a big week for the Seattle Mariners. The club made one of the most significant trades ever at the MLB trade deadline, and it is one that will pay dividends for the next two years and make the Mariners a contending team that most clubs will prefer not to face in the playoffs. Outside of the Padres deal to acquire Juan Soto, the M’s made the biggest acquisition by agreeing to a trade with the Cincinnati Reds for All-Star pitcher Luis Castillo. Castillo is the real deal. He probably has the best fastball-slider combination in the big leagues. I have watched a lot of Mariners baseball over the years and have seen the Big Unit—Randy Johnson—pitch and Felix Hernandez pitch, and I can honestly say Castillo looks better in some ways than both of those guys. He is the perfect combination of Randy and Felix, and both were devasting to opposing hitters. I can see now why Jerry Dippoto was so determined to make this trade happen. The Mariners gave up a lot, but they got a lot in return.
My Mariners beat the Yankees on Wednesday with Luis on the mound. It was stunning to watch. He mowed down the Yankee hitters and made them look silly at the plate. If the Mariners make the playoffs, Castillo could pitch the first and fifth games of a five-game series, and that would give us a chance to advance to the next round. In addition, the Mariners beat the Yankees without Julio and Ty France in the lineup. Plus, Kyle Lewis is back and Mitch Haniger will soon rejoin the club after his rehab assignment, just in time for either the Angels or the Yankees at T-Mobile Park this weekend. Baseball is fun in Seattle right now!
Enjoy summer, ignore Mr. Market, and Go Mariners!