Tom Lee of Fundstrat Global Advisers, a frequent guest on CNBC financial news and persistent bull, had some interesting comments during his appearance yesterday on CNBC. His positive comments were a telling counterpoint to the “vortex of downward misery” we are all seeing in the markets.
He correctly pointed out that the market declines have accelerated downward over the past week, but bonds have been fairly stable and the volatility index has risen and stabilized, but not “spiked”. Also, he felt for this market to deteriorate further, he would expect high yield bond spreads to widen and get “crushed”, but that has not happened [yet, that I need to note here!].
He also put forward an interesting set of statistics. Since 1940 there have been 16 occurrences of markets down 16% in 4 weeks; of these 16 occurrences, 12 of the 16 were higher by double digits 6 months later, and 14 of the 16 were higher 12 months later with an average return of 20%. We shall see!
So, though there are plenty of reasons to be bearish not the least of which is heightened inflation and the Russia/Ukraine conflict, as I have highlighted ad nauseum in previous blog posts this year, there are some reasons to have a positive view going forward. As we all know, though there are no guarantees, the markets have always rebounded to new highs given enough time. In fact, don’t forget that our most recent all-time high was not too long ago on January 3, 2022!!