01-13-2022, 11:32 AM
Investors can only take action on what "they know" - This I know (regardless of Omicron, Fed, supply chain, inflation, blah blah blah) This year for ME, I will concentrate on Quality - increasing share count in those portfolio investments that have demonstrated positive free cash flow, clean balance sheets, and moderate growth opportunities with reasonable valuations. (interesting? That's the same I have concentrated on for decades, this time is no different).
Mid-cycle expansion
Historically, As the economy moves beyond its initial stage of recovery and as growth rates moderate, leadership of interest rate-sensitive sectors typically has tapered. Economically sensitive sectors still have performed well, but a shift has often taken place toward some industries that see a peak in demand for their products or services only after the expansion has become more firmly entrenched.
Average annual stock market performance has tended to be fairly strong though not to the same degree as in the early-cycle phase. In addition, Sector leadership has rotated frequently, resulting in the smallest sector performance differentiation of any business cycle phase. No sector has outperformed or underperformed the broader market more than three-quarters of the time, and the magnitude of the relative performance has been modest compared with the other three phases.
Opinions vary (This one's mine)
-Scoot
“It’s different this time.” Lenders and investors invariably depart from time-honored disciplines when cycles move to extremes, out of a belief that current conditions are different from those that prevailed in the past, when those disciplines were appropriate. And just as invariably, they’re shown that cycles repeat and nothing really changes.- Howard Marks
Mid-cycle expansion
Historically, As the economy moves beyond its initial stage of recovery and as growth rates moderate, leadership of interest rate-sensitive sectors typically has tapered. Economically sensitive sectors still have performed well, but a shift has often taken place toward some industries that see a peak in demand for their products or services only after the expansion has become more firmly entrenched.
Average annual stock market performance has tended to be fairly strong though not to the same degree as in the early-cycle phase. In addition, Sector leadership has rotated frequently, resulting in the smallest sector performance differentiation of any business cycle phase. No sector has outperformed or underperformed the broader market more than three-quarters of the time, and the magnitude of the relative performance has been modest compared with the other three phases.
Opinions vary (This one's mine)
-Scoot
“It’s different this time.” Lenders and investors invariably depart from time-honored disciplines when cycles move to extremes, out of a belief that current conditions are different from those that prevailed in the past, when those disciplines were appropriate. And just as invariably, they’re shown that cycles repeat and nothing really changes.- Howard Marks