So let’s say these macro views are correct. Tudor, Drunkenmiller, Burry etc…. Are getting louder that we are in or about to go into a recession. And that usually lasts 6months to 18months with average of 10months.
I don't really care whether we are entering a recession. I'm not sure that's an issue with the stock market today.
I generally follow tech stocks. Lots of semiconductor stocks peaked in Jan 2022, and are down 30%-50% already. So, they've been in decline for 9-10 months or so. My hunch is they will turn higher sorta soon, don't know when, but it could be this week. Or six months from today. Don't really know.
But whether the US enter recession in six months, or not, may not have much to do with the share prices from here. The stock prices are already pretty depressed, although in reality most have just given up the big gains they experienced in the pandemic.
For me the interesting thing that is hard to evaluate is the interest rates. It seems like rates have been below 2% or so for so long that that's all I know about when valuing stocks. What's a growth stock worth when interest rates are 5% is a question we may have to deal with, and I'm unsure of the answer. It seems like higher rates should push PE multiples a lot lower. So...... a company growing just 18% per year (for example) on average - no matter how good the business - may not be able to trade at 40x like it did for the past 5-8 years. Maybe the go go growth stocks trade at 15x, and the so so boring stocks trade at 8x? I don't know. |
