Merry Christmas and Happy Hanukkah!
We are grateful for our Co/Investor Club community and hope you have a joyous holiday season. Wishing you great success in the year to come!
Eight
“The markets are a classroom where lessons are taught every day. The keys to investment success lie in observing and learning.” —Howard Marks
The major stock market indices continued spreading holiday cheer as they extended their winning streak to eight weeks. The S&P 500 was up by 0.8%, and the Nasdaq saw a 1.2% gain.
As we head into the final week of 2023, let’s take a moment to reflect on how crazy markets have been during the last few years.
While markets always throw up surprises and sprinkle humility to the overconfident, the time since the beginning of the coronavirus pandemic has been especially noteworthy.
The world shut down in the first quarter of 2020. For a few weeks, most stocks went straight down.
Then, stimulus came in—A LOT of stimulus. This helped take stocks back up as the world grew confident governments would help the business world eventually get back to normal.
And then stocks kept going up—as did the amount of stimulus being thrown into the economy—and speculation set in. We had meme stocks and bubbles and record-low interest rates.
And then we had some inflation. The Fed raised rates and talked expectations down with the hope of getting inflation under control. Risk aversion, which had been mostly absent from the markets for more than a year and a half, returned and caused both stocks and bonds to suffer big losses in 2022.
Then, we had less inflation in 2023 and even less as the year moved along. Hopes of a return to more stable prices and lower interest rates have once again caused animal spirits to return. Market indices are back near highs, and many of the same companies that led the market up from 2020-2021 and then led the market down in 2022 are the biggest winners of 2023.
If you believe all of that was predictable, well, then, I have a bridge in Brooklyn to sell to you.
Whatever 2024 holds, it’s not unreasonable to think the current set-up of high valuations, government involvement in the markets, and geopolitical tensions will lead to some surprises.
And we think it’s probably a good idea to make sure that your portfolio is prepared for a future full of surprises—both good and bad. As we wrote in March of 2021: “The best time to think about how you’re prepared for that future is now. It may not happen, but if you wait until it’s obvious, it’ll be too late.”
“Investors invariably lose track of the fact that both short-term gains and short-term losses can be impostors, and of the importance of digging deep to understand what underlies them. Investment performance is what happens to a portfolio when events unfold. People pay great heed to the resulting performance, but the questions they should ask are, Were the events that unfolded (and the other possibilities that didn’t unfold) truly within the ken of the portfolio manager? And what would the performance have been if other events had occurred instead?” —Howard Marks
Tweets of the Week
In Case You Missed it…
Justin Ishbia - Lessons from Acquiring 586 Companies
Same Stock Different Returns - by Sean Iddings
A Deep Dive into Shareholder Value Creation by Acquisition-Driven Compounders
Respect Each Others’ Delusions - by Morgan Housel
How to Buy a House in Today’s Market
Year End Financial Planning Checklist
The Security Analysis Podcast: Matt Cochrane: Discussing Peter Lynch
Grant’s Current Yield Podcast: BIG THINGS COME IN SMALL PACKAGES
If you have not already upgraded your membership…
Avenel Financial Group, a merchant banking and advisory firm located in Charlotte, NC, launched a new business venture called the Co/Investor Club. The Co/Investor Club is a community of value-oriented investors that collaborate on investment opportunities and ideas. You are receiving this newsletter because you are a Free or Premium Member of the Co/Investor Club!
Chat with Mike
Whether you’re an executive with investment opportunities or a college student looking to network, we would love to chat with you! Email our Founder, Mike Pruitt, at mp@coinvestorclub.com with questions and ideas or schedule a meeting.
Don’t forget to follow us on social media too!
Twitter: @coinvestorclub1
LinkedIn: Co/Investor Club
For our disclaimer, please visit our website.
Have friends that want to join? The Co/Report is public, so feel free to share!
Thank you for reading. Co/Report grows through word of mouth. Please consider sharing this post with someone who might appreciate it.