The market as with life has its ups and downs. You must learn to take the downs with the ups. Certainly, the past four years with the COVID Pandemic and failed economic policies leading to multi-decade high inflation has been an economic and financial roller coaster. The fraidy cats don’t have the fortitude to stick it out through the downs. Only the liars claim to get out at the top. For the better of us, we take the downs with the ups and smooth out the ride. Too many people bailed out after last year to not enjoy the tremendous rebound in the first half of the year. I never expected last year’s drubbing, which I refer to as the “hundred-year flood” for the financial markets where the only sector to rise was energy.
For the first half of the year, the growth sector has come back with a vengeance, however you had to do more than just ride the index. You had to forecast which aspects of growth would be the outperformers, which for the most part were semiconductors and Artificial Intelligence. So far, we were on the right side of that trade. It could change, so I would not be reticent to take some profits, even if doing may be at the cost of generating some capital gains. Consumer discretionary stocks had a nice rebound this year despite the struggles that consumers are experiencing. There again you must be selective. Chipotle Mexican Grill (CMG) and Netflix (NFLX) have been big winners whereas more traditional entertainment stocks such as Disney (DIS) and Paramount (PARA) have been underperformers. It has amazed me (and many others) how DIS has managed to destroy its brand in a very short period of time. If it recovers, it won’t be for many years.
For the second half of 2023, I am looking for a shift into smaller cap stocks and have been seeking opportunities in that sector.
Economically, we should expect that interest rate hikes will continue for the short run. To the downside, a positive and negative will likely occur: inflation will continue to decline but so will the labor market. June’s labor report was disappointing and delivered some downward adjustments to April and May’s labor numbers. I am most concerned about the average hours worked which continues to decline. Typically, employers cut back on hours before laying off staff. My definition of a recession is two consecutive months of negative job growth. I am not certain that will turn out to come to fruition, but there is a small risk of such an occurrence. Overall, I remain of the opinion that we have experienced a rolling recession across the nation and are amid a “soft landing” for the economy.
Personally, I have experienced some ups and downs. I was at T-Mobile (TMUS) Arena with my three youngest children to witness the Vegas Golden Knights clinch the 2023 Stanley Cup. The next morning, I flew to New Jersey to await the birth of our first grandchild. Aubrie Scarlett Rothbort was born on June 19. Unfortunately, my father-in-law, Arthur Horowitz, a wonderful man who was really my second father for forty-six years passed away just a few days later, as a great grandfather. My biological father, Clark Rothbort died in 1977 just before my 16th birthday.
You must take the downs with the ups.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC was long CMG - although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, (LVAM) an investment advisor representative, specializing in high net worth private wealth management. LVAM is affiliated with Kingswood Wealth Advisors Services, a registered investment advisor. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right-hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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