The Bull Market is Back (Stocks +20% From Lows)!

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Market News and Short-Term Predictions

We have officially crossed the 20% returns in the stock market deemed necessary to declare a bull market! Congrats to all my diamond-hand long-term bulls who bought their way into some deals that 2022 presented.

If you're wondering what the path back to a bull market looks like, take a look at the chart below. We have had quite the volatility over the past year, but we have finally broken out of the lower lows pattern.

Since 1932, bull markets have lasted an average of nearly 5 years and the S&P 500 sees a gain of 177.8%. The longest bull market started in March 2009, near the end of the Great Recession, and roamed Wall Street for almost 11 years.

The now-deceased bear market lasted about nine months and saw a drop of 25.4%. It was rather tame as far as bear markets go. Since 1950, the average bear market has lasted 13 months and the S&P 500 fell 34.2%. Since 1929, the average bear market has lasted 19.6 months and the S&P 500 has dropped 39.4%.

As you can see, based on the data it is much easier to be a long-term bull versus a long-term bear. Now of course we may have pullbacks during a bull market, but overall the market in the long term wants to go higher. I believe that October 2022 was a bottom for the market and that we are truly in a bull market. We may find ourselves in some volatile periods coming up with possible rate hikes or random spikes in inflation, but the market is forward-looking and those situations are a bit baked in.

I still believe the market short term may pull back, but believe we continue to go higher in 2023. Outside of a black swan event, stocks seem to be rotating away from defensive and more into growth. I'm already positioned in growth, but am adding to a mixture of stalwarts and faster growers still that I think are valued at a discount. While I remain to hold some stocks that have catapulted higher already in 2023, I'm not aggressively adding to AI names (as I'm already positioned in them) or stocks that are bouncing after being down 90% but still are losing money and don't have solid balance sheets.

I also want to talk a little bit about the crypto markets as this week both Binance and Coinbase were sued by SEC. Who is surprised? No one, but it is important to realize this regulation uncertainty around crypto made me make a move this week. I sold out of my MATIC position entirely as it was part of a list that the SEC said was security. You may wonder why I want to avoid any cryptos that are labeled that way. Well if these exchanges like Coinbase and Gemini are forced to no longer support cryptos that are securities there may be larger sell pressure on those cryptos. The full list is here.

Lessons to Be Learned

I think one takeaway from this week was Apple's announcement of the Vision Pro this past week. I see a lot of confusion around the product and people poking fun at the launch as the product isn't necessarily something people would use right now. The "right now" is the key part of that sentence.

While no one has a crystal ball, companies need to be thinking about the future and what they need to do now to stay relevant. Even if the vision pro ends up cannibalizing iPhone sales if there was a shift from phones to headsets, at least Apple wouldn't become the next kodak or the next Blackberry. When it comes to companies regardless of their sector, if they aren't innovating and keeping up with the times another competitor will swoop in and take market share. I want to invest in companies that are thinking about the future in a strategic manner, meaning they are investing in innovation but aren't completely derailing the core business to attempt moonshot.

Options Trading Portfolio

Closing Trades

I ended up getting caught in a credit call spread in SPY that was expiring next week. With the strikes breached and my short delta starting to add up a bit, I went ahead and took the -$244 loss in the position.

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