Sideways

I have been fortunate enough to keep a tab on the markets back home through various means while deployed in the Middle East. Mainly through weekly podcasts such as the Market Huddle, the Macro Compass, and a daily one Market Call.

With that said it’s been nice to have fewer media streams blasting me with conflicting information or worse the same information, inundating my own thoughts on the market.

For a long time now I haven’t particularly thought the markets risk/reward was too positive, so a few months back I started rolling 3 month CD’s averaging about 5% annual yield. And while yes my money is locked during that time frame, and a HYSA can yield about 4% about now, I literally have nothing to spend my money on right now, so locking it up a few months at a time is fine for me.

I say this because being a retail investor, I even had the brains to realize months ago that putting my money on the sidelines into a 4-5.5% Risk Free asset was smarter than 1) letting my money sit not working for me and 2) getting into a market that I don’t trust. And then we had the regional bank crisis that was set off due to some bank runs and poor risk management. But part of this banking failure was something that I acted on, but didn’t think to make money on. I’m sure someone somewhere saw that banks not giving customers higher yields was a great time to short some of these banks. And quite possibly it could still be a decent trade, however some of the regionals I looked up recently have a significant short interest and might be a bit overplayed at this point.

I do own a few things at the moment, and bought them many months ago and have just been holding them.

The first 2 big ones I like are 2 ETF’s EWZ (Brazil) and EWW (Mexico). I’ve been sold on the near shoring thesis for quite some time now and EWW has been one of my better plays in a year that has been difficult to make right calls. The thesis is that as Global power shifts around with disputes of many key players around the globe, supply chains need to reign in their unpredictability. Mexico can be a key player for North and South America to produce goods, boosting their economy and the peso. EWZ has been hit and miss mainly to the political events surrounding Lula’s election into office. However, I still see Brazil as being an emerging player in the global markets. It is an expansive country, with an abundance of resources, and home to some powerful companies such as Petrobras. The Brazilian government was also one of the better ones at managing through inflation during Covid and has been able to mitigate the Real from losing too much value.

Another one that I like is Meta. I bought this a few days before their most recent earnings call and it has worked in my favor. I have been against buying big tech name stocks for a while now, even though I’d be much more rich if I had I suppose. But Meta was a stock that did get beat down, quite a bit actually, but has been pretty resilient and been open about some plays they are making. And I’m all honesty, I found myself really browsing and looking to buy, and have bought clothing off advertisements directed at me. Something I would never do in the past and think this could be a huge revenue growth stream if they actually got a cynical millennial like myself to purchase goods through them.

Whats up next?

Although we are in a bit of a rally at the moment, I don’t think it plays out in one direction for too long. I believe we are still going to see a trading range in the markets between the S&P levels of 3,800-4,200.

The market has been rallying off of AI commentary and speculation, as most of the big tech rally while the broader market stays flat. While I believe AI can and will be a big disruptor, I think it’s too early to know where the disruption will come from. ChatGPT came out of nowhere and took immediate hold. If a supercharged chat bot can make that much noise, there is something much bigger lurking in the waters that the markets are unaware of yet.