Our Insights

In the investment world, following the crowd can be hazardous. We seem to be at one of those inflection points where this piece of market wisdom may hold true. Howard Marks, who I would say is one of the savviest investors out there recently quipped, “this just in, you can’t take the same actions as everyone else and expect to outperform”. So here we sit looking into our crystal ball for 2023 and the consensus is decidedly bearish. The crowd thinks a recession is imminent, the Fed is behind the curve, earnings are coming down and the market has more downside moving into 2023. As allocators of capital it’s hard not to get caught up in this negative headspace. Further compounding this feeling of malaise is some of the bigwigs of business are echoing a similar narrative. Jamie Dimon, perhaps the best bank CEO in the modern era with vast insight thru JP Morgan’s global footprint recently said, “These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now”. Jeff Bezos, who sits atop a vast consumer discretionary empire, seemed resolute while being interviewed last month, “Yep, the probabilities in this economy tell you batten down the hatches” and Ray Dalio, one of the most successful hedge fund managers in the last 20 years said, “Right now, we’re very close to a 0% growth year. I think it’s going to get worse in 2023 and 2024”. These negative sentiments are also reflected in much of the market data. For example, we have the highest put call ratio since the 90’s, investors have been net sellers of equity mutual funds and ETF’s in four of the last five weeks, and negative bearish sentiment, according to the AAII, is higher than during the COVID shutdown or the great recession. I could go on and on with this, but the conclusion is very clear that “the crowd” is bearish.