Manic Depression

SEPTEMBER 30, 2022

On September 28th, 97% of the stocks in the S&P 500 rose. The very next day 92% of the stocks in the index fell. The “breadth thrust” of the 28th not only failed to confirm; it reversed. This kind of manic depressive behavior is characteristic of bear markets and somewhat less common in bull markets….

Some so-called inflation hedges have disappointed. The widely held notion that crypto represented an inflation hedge has by now been discredited. REIT returns have been particularly negative (down 29% YTD).

If a portfolio is down 5%, it need only rise a bit more than 5% to recover fully. If it is down 25%, it must rise 33 1/3% to recover, and if down 50%, a full 100%, which is obviously much harder to achieve. [Avoiding] large interim losses is thus very helpful for the math of long-term return….

More venture and private equity firms are selling holdings to other venture or private firms or even to other funds of their own, casting even more doubt on the propriety much less the accuracy of valuations.