Funnily enough, this is where we disagree (slightly). You're right (in your analysis) but we don't see eye-to-eye here.
My feeling is nothing from here on out will be enough to dent the market - even a shallow recession won't crush the market. To me, 2022 was more like 1998 - only the time and depth are different.
As for small caps, I agree. I do think defaults are likely. Why would small caps outperform the market? The flows aren't there and will likely be negative as value funds underperform and investors pull their money. So, I think small caps face more pressure. If you can afford to buy them with no clear catalyst, you can do a Greenblatt through the dotcom bubble - I can't, so I'm going for either mid-caps or micro-caps with clear catalysts.
Chanos also closed down shop - people aren't interested in insurance on the market. I imagine, in the short-term anyway, the market will soar higher and higher as more flows make their way into "growth". I don't think the top has come in. Maybe this is the "momentum" side of me, but until I see some real threat that could stop the market, I'll remain bullish.
To reiterate, I agree that consumers are stretched but they've been this way for a while. The market just doesn't care. I completely agree with your views on small caps, but not on the general market.
We haven't seen all the signs of "bubble" and, if we have, they've been in massive entities so they're easily avoidable. Jmo.
Best,
Harshu Vyas |
