Looks Like Santa's Taking This Christmas Off

Every year we hear about a "Santa" rally at year-end. This year it looks like Santa's taking off. Sure, there's time left before Christmas. But not much. Could stocks rally? Maybe a bit early next week, after two down weeks. But a real rally, with sleigh bells ringing? Don't bet the ranch.

Which brings us to now. It's almost Christmas. The year hasn't been pleasant for investors. But, still, Christmas should arrive on time. And if you're Jewish, there's Hanukkah - plus Christmas (as some Jewish folk I know celebrate 'em both). 

As a little Christmas gift for your stocking, we'll leave you with what we consider some valuable bullet points from on our Brain Trust folks. It's a mixed bag of observations, some of which may not be worthy to hang on your Christmas tree. But the basic thrust is that if you understand what's happening, and what will likely happen in 2023, you can profit. Heck, the guy's been in business since the late 1970s. He's seen a lot and brings that perspective to all his work, which I would rate as moz def "superior. 

Here are his insights:

Overall Theme: Prepare for a Profit from Historic Turmoil in 2023

-   $900 Billion into ETFs/long-only funds in 2021: exceeds previous 19 years combined

-   Rule: The hangover is proportional to the size of the fun you had at the party

-   >$46 Trillion of value lost in stocks and bonds globally: This is only the start

-   The Great Reset is here, chaning the world as we’ve known it.

-   Recalls that in Europe CBs pushed rates below zero – so Investors paid interest for the pleasure of lending money to the government: This has never happened before in history.

-   Every week confirms 2020 prediction that we should expect something akin to the Great Depression, except worse.

-   Fed will try to reflate, but will lit work this time?

-   Current Bear Market rally “the last gasp.” – Primarily short-covering of stocks with high P/Es and no earnings (the best stocks to short).

-   In a bull market valuations such as PEs are irrelevant. Stocks without earnings usually perform best.

-   In a bear market, continual pressure to get stocks down to reasonable historical levels relative to interest rates: The higher the interest rates, the lower the P/Es

-   Year-end volatility will be big, including changes in political power, new diseases, great investment scams

-   Best way to protect portfolios: reduce exposure

-   Inflation is not dead

-   Will see continuing painful plunges in stocks now held by most pension plans. Many household names will not survive, others will go to single digits

-   Those buying stocks now will face huge losses over next year or two.

-   Energy most valuable sector for the intermediate term – detailed analysis provided

-   NB: Strong resistance will be 2014 high – The longer a high is in the past, the stronger the resistance

-   NB: The price of oil is inelastic: Demand does not decline meaningfully because of higher prices.

-   Fed has not even become serious in starting to reduce liquidity – passively allowing balance sheet to run off. This is why inflation will go to new highs

-   2022 hikes will impact in 2023 – big problems may occur.

-   Unless the economic contraction is allowed to play out, inflation will not see a lasting decline.

-   Discussion of Cryptos problems, including huge loss in value, leads to CB digital currencies

-   Decline in RE prices: another signs of recession

-   China: Stopping a revolution is reason for COVID lockdowns

-   Lists various “canaries in the coal mine” of global crashes: British credit market event, historic scams and fraud, SPACS, Cryptos as biggest investment scam ever, outbursts of diseases and accidents, economic destruction caused by this man-made virus for the record books,

-   NB: Every financial crisis preceded by isolated crisis or events that are not considered important

-   Expect shortages of food deliveries. Water shortages also ahead.

With that, we'll be finishing off our prep for January this week, then taking off as much time from this crazy profession as possible, assuming market cooperate. Frankly, even if they get drunk and fall down between now and New Year's we think our portfolios will hold up OK. Indeed they have all year.

Wishing you all a...

Happy Hanukkah!

and

Merry Christmas!