Great summary of markets in 2023. Chart #1 about the heightened level of retail participation since the pandemic could explain so much about how markets have moved over the past few years.
Indeed, exactly, I think it explains a lot -- if the marginal buyer believes "X" then that's how they will trade, and that's how price will be swung around...
I very much overestimated the business acumen of China. This scenario all was too predictable from such a far distance to simply happen. A powerhouse of a country, I thought they would 'arm' themselves to the max with every financial braintrust to advance and stay above it all, while US languished. Time waits for no one..
That might be one of the biggest macro surprises/wrong calls for me in 2023 -- that China would do stimulus... they did do some, and the case for stimulus has grown very compelling now, but overall too little and too drip-fed. Conclusions: 1. they may have done too little too late; and 2. a big bang stimulus may come only later and deeper in the downturn process... meantime, it's the unhappy medium of not enough stimulus and significant macro downdrafts
With regards to chart #10. How is that to be interpreted on x and y-axis? Cant be trading days and returns withs its around negative 40k at some point? What time frame :D?
Thanks :) Still dont get the different axis, but was only a curiousity. Not gonna implement a trading strategy for it even though the returns seems quite outstanding haha. Thanks,.
Callum, how much weight would you put into #6 range-trade/lost-decade for equities at this point? Are we dependent on legitimate productivity increases for the broad market to continue momentum--which I could make the case for--or would you allocate away from US equities?
I think (expensive) starting point valuations probably gets you there + the high allocations aspect and lower scope for incremental inflows above/beyond natural rate of savings vs discretionary income -- maybe also add in some other ingredients like late-cycle economy, bad geopolitics, demographics... but those are more kitchen sinking.
Fundamentally for the market to go higher you need either static or rising valuations (latter harder when they are already high) and/or rising earnings. If earnings drop back to nGDP growth which we could estimate around 4-5% and valuations are unchanged, that's still up but undershooting vs expectations formed by the 2009-23 bull run..
That is an exceptional collection of charts.
Thank you Randy!
Great summary of markets in 2023. Chart #1 about the heightened level of retail participation since the pandemic could explain so much about how markets have moved over the past few years.
Indeed, exactly, I think it explains a lot -- if the marginal buyer believes "X" then that's how they will trade, and that's how price will be swung around...
I very much overestimated the business acumen of China. This scenario all was too predictable from such a far distance to simply happen. A powerhouse of a country, I thought they would 'arm' themselves to the max with every financial braintrust to advance and stay above it all, while US languished. Time waits for no one..
That might be one of the biggest macro surprises/wrong calls for me in 2023 -- that China would do stimulus... they did do some, and the case for stimulus has grown very compelling now, but overall too little and too drip-fed. Conclusions: 1. they may have done too little too late; and 2. a big bang stimulus may come only later and deeper in the downturn process... meantime, it's the unhappy medium of not enough stimulus and significant macro downdrafts
Love charts
Yes!
Fascinating charts.
With regards to chart #10. How is that to be interpreted on x and y-axis? Cant be trading days and returns withs its around negative 40k at some point? What time frame :D?
Very odd indeed.
here's the method: https://www.buildalpha.com/trading-strategy-for-each-day/
Thanks :) Still dont get the different axis, but was only a curiousity. Not gonna implement a trading strategy for it even though the returns seems quite outstanding haha. Thanks,.
Callum, how much weight would you put into #6 range-trade/lost-decade for equities at this point? Are we dependent on legitimate productivity increases for the broad market to continue momentum--which I could make the case for--or would you allocate away from US equities?
I think (expensive) starting point valuations probably gets you there + the high allocations aspect and lower scope for incremental inflows above/beyond natural rate of savings vs discretionary income -- maybe also add in some other ingredients like late-cycle economy, bad geopolitics, demographics... but those are more kitchen sinking.
Fundamentally for the market to go higher you need either static or rising valuations (latter harder when they are already high) and/or rising earnings. If earnings drop back to nGDP growth which we could estimate around 4-5% and valuations are unchanged, that's still up but undershooting vs expectations formed by the 2009-23 bull run..