investing is not putting down chips on a gambling table

Don’t bet on the recent rally

Market Ethos.
22 August 2022.

Investing is NOT gambling; done right, it involves thoughtful portfolio construction – incorporating objectives with capital market assumptions influenced by the current environment and expectations going forward. But sometimes gambling is afoot in the markets.

For example, Bed Bath & Beyond does not have a new must-have bathroom accessory product that would justify the share price jumping from $5 to $25 over the past week, with the subsequent drop back down to $11. Yes, the Reddit/options traders are at it again, but the biggest gamble may be the recent rally in the markets.

A few days ago, the S&P 500 reached a level in which it was down less than 10% compared to its all-time high. It’s been a little weaker since then, but still an incredible rally from the lows of mid-June. The S&P has risen +17%, Nasdaq +22% and TSX +11%.

Related articles

Market Ethos

Déjà vu

June 25, 2024. Market Ethos. Using the 1990s dotcom bubble as a loose comparison, is this 1997, 1998, 1999 or 2000? Are the four horsemen…

2 minute read

Market Ethos

Is inflation beat? Not so fast.

June 17, 2024. Market Ethos. We think inflation might cool more, but counter forces will probably limit the improvements. If the economy reaccelerates, inflation could…

2 minute read

Market Ethos

Everything in moderation

June 10, 2024. Market Ethos. Investors should start to think differently about portfolio construction and diversification. Call it diversifying your diversification.

2 minute read