Last week ended with a bang. The US equity markets climbed significantly. Many think the pain is over, but I have my doubts.
While I have no crystal ball, the unrelenting increases in interest rates and inflation are caustic events that will not be shaken easily. Many participants in the markets have only experienced continually rising markets in their investment careers and pullbacks of very short duration. Europe is already in recession. We are tightly connected in this economic world. There are also still many companies out there hoping to go from losses to profits. Hopium is still pervasive, but hope is not a strategy.
Often, people get pulled into the markets during the bear market rallies only to feel more pain of losses. The most recent bear market rally was strong which can fool many and pull more into the vortex of buy and lose. FOMO is the bear's accomplice. The bear will leave eventually, but not before pulling more down with it.
So protect your downside and tread with caution. The third and fourth quarters will show the profitability weakness of the long-term Fed policy of easy money. The bill is now due!
Be smart, be well-read, be aware and be successful.
