Beta Bumper Rails are Back On
Actionable Market Insights from Tuttle Ventures
Welcome to the +35 new subscribers this week and +322 over the last 90 days!
If this is your first time, we share actionable market insights and portfolio updates so YOU can make better investment decisions and get an inside view at Tuttle Ventures.
I highly encourage newcomers to go back and read why I started the newsletter with the Art of the Start and the value in unique investment management services with Who Advises your Advisors?
I started Tuttle Ventures in order to help people find lasting financial security.
When life turns as volatile and confusing as it has over the past year, even the most patient investors may come to question the wisdom of the plan they’ve been following.
This week, it is our hope we bring data to highlight why the recent bullish run in equities is positive short term and why we bought stocks this week.
Bowling with Bumpers On Easy Mode
In the world of bowling, bumper bowling is set up so a pair of rails are placed on either side of the bowling lane and block the gutters. This stops the bowling balls from falling in and keeps the balls on track to knock down pins and score.
No matter how hard you throw the ball in the wrong direction, the gutter guard or bowling rail stops the ball from falling in.
This style of play turns on an “Easy Mode” to the game.
Kids and less experienced players can have a good time playing with less risk.
Halfway through 2022, equity beta bumper rails are back on.
The Fed is pivoting back to “Easy Money Mode”.
The Fed has walked back away from tighter financial conditions.
We see this as good, in the short term, for stocks.
For the third week in a row, let’s revisit the Chicago Fed’s Adjusted National Financial Conditions Index (ANFCI).
Remember, positive values are associated with tighter-than-average financial conditions.
Negative values reflect easy money conditions (independent of economic variables).
Look at the complete peak and U-turn over the last 3 weeks!
2022’s trend of strong tightening has reversed, with values now trending slightly downward.
Leverage, Credit and Risk metrics in the index are all saying its time to buy stocks again.
The market is showing a clear sign of a turnaround.
Whether this turnaround is artificial or the real deal is not for us to be the judge.
Whenever the Fed has hiked alongside higher food and energy prices —jobs were lost in large numbers. The Fed knows that broad-based tightening creates broad-based slowdowns and for that reason they are easing up.
The bumper rails are back on.
What about fundamentals?
Doesn’t matter.
Macro is driving everything at the moment.
What about inflation?
Doesn’t matter.
Recession fears are greater than inflation fears.
We believe the Market and Fed will work in coordination, pushing a “risk on” appetite until something breaks OR we get a “soft landing” from inflation over a longer time period.
Now that the market has repriced slower eps growth, lower rates and peak inflation. Remember that the market is not pricing in an economy recovery.
Portfolio Updates
We bought high beta stock positions this week in NOC 0.00%↑ , BK 0.00%↑ , and CI 0.00%↑ at lower positioning than typical (2.5% or less across accounts).
Our screening process for these new stock positions was based on the top 50 stocks in the S&P 500 based on their return on cash (ROC) and filtered in their respective sectors.
Markets certainly require an open mind and a willingness to shift gears...and we welcome the opportunity to play the game on “easy mode” with bumpers.
Final Word
Thank you for reading and I am grateful and humbled to be able to learn, grow and invest alongside you at Tuttle Ventures.
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Check out the website or some other work here.
Best,
Darin Tuttle, CFA
NOTE - This is not investment advice. Do your own due diligence. I make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in this report. Any assumptions, opinions and estimates expressed in this report constitute my judgment as of the date thereof and is subject to change without notice. Any projections contained in the report are based on a number of assumptions as to market conditions. There is no guarantee that projected outcomes will be achieved. Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.