Seven
“There are two kinds of people who lose money: those who know nothing and those who know everything.” —Henry Kaufman
The S&P 500, Nasdaq, and Dow Jones Industrial Average all rose for the seventh week in a row last week. That’s quite a change from where we stood at the end of the trading week that ended on October 27th, after a couple of weeks of decent-sized market declines and unusual downside volatility, even among so-called blue chip stocks.
The end of October was also a time when headlines were being made about the dramatic underperformance of small-cap stocks compared to other stocks during the preceding twelve months. Since that time, the Russell 2000 has risen by more than 20%, outpacing all other major indices.
The move up this past week was accelerated by the Fed, or at least by those animal spirits looking for any good or reasonable or mildly okay reason to be optimistic, and found that reason in the comments from Fed Chairman Jerome Powell.
The Chairman, who had historically been cautious about signaling the possibility of future rate cuts until the Fed was confident inflation had been kicked, was just a little less cautious. While the market had already been pricing in potential rate cuts in 2024, hearing Chairman Powell confirming that potential was all it took to spark a big rally during his press conference.
We don’t know what the Fed will do in 2024, so don’t give it too much thought. Comments from the Fed will move markets in the short term, but buying stocks when they go on sale will allow one to sit back, profit, and ignore all the noise and nuance around what this or that Fed member has said in the last 24 hours.
“If you’re agnostic about those macro factors and therefore devote all your time to thinking about the individual businesses and the individual opportunities, it’s a way more efficient way to behave.” —Charlie Munger
“If we’re right about the business, the macro factors aren’t going to make any difference. And if we’re wrong about the business, macro factors are not going to bail us out.” —Warren Buffett
“Given that we don’t know exactly which future will obtain, we have to get value on our side by having a strongly held, analytically derived opinion of it and buying for less when opportunities to do so present themselves.” —Howard Marks
Tweets of the Week
In Case You Missed it…
How Are You Different? - by Ian Cassel
Long-Term News - by Morgan Housel
Jeff Bezos: Amazon and Blue Origin | Lex Fridman Podcast #405 (video)
Pattern Recognition: Opportunities and Limits - by Michael J. Mauboussin and Dan Callahan
Business Breakdowns: TerrAscend (TSND.TO / TSNDF) – Jason Wild’s Big Bet on Cannabis
Founders Podcast: #330 Les Schwab (Charlie Munger recommended this book)
The Grant Williams Podcast: This Week In Doom Ep. 17 - Moles, Meat & Mayhem
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