As Richard Russell once said, "The worst crime that an analyst can commit is remaining bearish in the face of a rising market." - Richard Russell
When one is optimistic and the market declines, this is often a mistake that can be easily forgiven since corrections often occur at unexpected moments. When you are bearish and the market rises, you have committed a much more egregious error. No one wants to miss out on major uptrends. ?
Well, it’s been a great start to the year for the major financial indexes, as the S&P 500 finished Friday up 3.50%, and the technology-heavy Nasdaq Composite closed up 6.50% as of Friday.
January has been a great month overall, unless of course, you happen to work at Google, Amazon, Microsoft, or any of the other technology companies that laid off 10's of thousands of their staff last week...
I have also finally joined the world of social media, so please feel free to follow me on Instagram, where I will be sharing more content on different financial topics
In the precious metals market, gold continues to show resilience, and following a three-day pullback during which it found support at $1896, it jumped to an eight-month high overnight at $1835, supported by US yields and the dollar remaining near new cycle lows. As long as these two key sources of inspiration for momentum and machine-driven strategies continue to support, gold is likely to remain supported, despite a continued lack of interest from ETF investors, as total holdings remain near a two-year low, having seen no pickup during the past two months' rally.
Crypto Market Continues their Ascension
In the crypto world, Bitcoin (BTC) and Ethereum (ETH) logged another week of positive gains in what has been a strong start to 2023. Prior to a late-Friday surge, the two largest cryptocurrencies by market capitalization had risen 10.15% and 9.92%, respectively, and 25% and 28% year to date. On a relative basis, BTC and ETH’s seven-day performance landed them near the top of the leaderboard for the first time this year. Among the top 20 cryptocurrencies by market cap, BTC’s performance was third among the group. ETH ranked fourth.
Overall, it was a positive week for the financial markets, with strong performances from the major indexes, gold, and cryptocurrencies. Investors will keep a close eye on developments in the coming days to see if this upward trend can be sustained.
How to Act in an Upwards Market?
Since the financial markets are showing more improvement, investors need to keep themselves informed and make strategic choices to optimize their gains. To help you navigate a market that is experiencing upward expansion, here are some tips:
- Maintain a diversified portfolio: despite the fact that particular industries may be seeing tremendous development, it is essential to distribute your investments over several assets to reduce the chance of loss. Having a portfolio that is diversified will help protect you against the volatile nature of the market and guarantee that you are not putting all of your eggs in one basket.
- Watch out for the following valuations: When the market is expanding at a healthy rate, it is simple to believe the hype and invest in assets that are priced too much. However, it is essential to remember that whatever rises must eventually fall. Before making any investment choices, you should be sure to do extensive study and carefully consider values.
- Always keep in mind the bigger picture: It is crucial to keep in mind the long-term potential of your assets, even if it might be tempting to concentrate on short-term benefits instead of the long-term potential of your investments. Consider the general health of the economy and the possibility for growth in the future.
- When the potential for growth in a market is great, removing part of your earnings from the table is vital to maximizing your potential return. This will help you preserve your profits and decrease your exposure to risk in the event that the market experiences a decline.
- Keep an open mind: The market continuously evolves, and new possibilities may appear. Maintain an open mind to fresh perspectives and be ready to adjust your investment plan in response to the changing landscape of the market.
Please reach out to me any time if you have any questions or would like to book a discovery call.
Weekly Round-Up
- The S&P 500 and the Dow sustained their first negative week of 2023 amid mixed earnings results, big layoff announcements from major technology companies, and concern about the prospect of a recession. The Dow’s weekly drop of 2.7% was far steeper than the 0.6% decline for the S&P 500; in contrast, the NASDAQ finished up 0.6%.
- Entering the peak of earnings season, analysts have been scaling back their forecasts for results from the first half of 2023. In recent weeks, earnings expectations for this year’s first and second quarters switched from year-over-year growth to declines for companies in the S&P 500
- Partisan brinkmanship in Washington D.C. over the nation’s debt ceiling aggravated the sense of anxiety for investors. Democratic and Republican leaders remained at odds over fiscal issues, and the U.S. Department of the Treasury on Thursday began taking special accounting measures to meet debt obligations and prevent a potential default—at least for now.?
- By one measure, the inversion of the yield curve for U.S. government debt recorded its biggest gap on record. As of Friday, the yield of the 10-year U.S. Treasury bond was around 3.48% compared with 4.66% for the 3-month bill—a negative spread of 118 basis points. Prior to this year, a negative spread had never been more than 100 points, according to U.S. Federal Reserve data going back to 1982.
- The final month of the holiday shopping season didn’t provide a catalyst for the broader U.S. economy, as retail spending in December fell at a worse-than-expected pace of 1.1%.
- For the second week in a row, a U.S. large-cap growth stock benchmark outperformed its value counterpart by a wide margin, reversing the trend from 2022, when the value equity style dominated
- Despite inflationary pressures, Japan’s central bank maintained ultra-low interest rates, including its 0.5% cap for the yield of its 10-year bond.?
- Thursday’s scheduled release of the government’s initial estimate of fourth-quarter GDP is expected to show that the economy recorded its second consecutive quarter of positive growth, indicating a recovery from the negative results recorded in early 2022.?
