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Be an Opportunist

More upbeat earnings, more market rotation, more Tech woes.

Last year’s best stock performers continue to get hammered as the rotation out of tech stocks continues. Of course, investment folk always feel the need to wrap these declines into a digestible narrative, so the violent market moves are easier to comprehend. This time around, the majority of the blame has been attributed to a growing fear of higher inflation and rising interest rates. In reality, these growth tech names simply couldn’t maintain a perpetual state of hyper-growth. As I mentioned last week, a pullback was always on the horizon.

Market participants continued to favour value and cyclical stocks despite a strong earnings season for many tech names. Inflation fears were dampened by a less than impressive jobs report, driving interest rates lower.


Supply bottlenecks and post-pandemic demand have sent commodity prices soaring to their highest levels in almost a decade.

Metals, food, and energy are at the fulcrum of any growing global economy. Throw some supply-side problems into the mix, and you have a perfect storm.

Lumber has more than tripled in price since last year. Copper has jumped almost 40% since the start of the year and is now up over 100% from its pandemic low point. While the supply-side contraction will likely be short-lived, this high demand, low supply environment looks set to keep commodity prices elevated over the near term.


Ethereum (Ether), the world’s second-largest Crypto, moved above the $4,300 mark for the first time this week, doubling in price in just over a month. Ether continues to emerge from Bitcoin’s shadow as more and more investors look to other cryptocurrencies for returns.

Apparently, the relatively stable price of Bitcoin over the last week or so is too mundane for the get rich quick, volatility hungry crypto elite.

Market Outlook

With commodities continuing to soar and Washington debating even more stimulus, inflation is still the market buzzword of choice.

The Fed is insistent that the recent spike in commodity prices and wage pressure will be short-lived. They also have continued to highlight their willingness to let inflation run above target for a period as the economy revives.

Despite the leading indicators signalling a pick-up in inflation, many market participants are now making a case for a more benign inflation outlook. Traders have trimmed bets on rate hikes, while Goldman and Pimco have both soften their inflation outlook.

While fiscal stimulus, an even more supportive Fed policy, Supply-side contractions and pent-up demand will likely bring near tern inflation. Secular trends such as technological innovation and demographics will ensure these inflation figures level out over the medium/long term.

In short, inflation is likely to rise above the anaemic levels it has been anchored to over the past decade, but this inflation jump won’t bring us back to the ‘out of control’ numbers experienced during the 1970s, despite what some doomsday economist would lead you to believe.

The past two weeks have probably been traumatic for anyone playing it fast and loose with the big winners of last year.


While these losses can be painful, it highlights the need to stay focus on the core principles of long-term investing.

  • Don’t get caught up on short-term moves. Focus on your long-term time horizon

  • Make sure you have adequate diversification

  • Be patients: There WILL be periods where markets fall over 10%, that is a guarantee

  • Stay committed to the companies you believe in

  • Be an opportunist: Use market corrections to build out positions in your favourite stocks.

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