The S&P 500 that soared 2.11% on Lunar New Year’s Eve kicked off the year of tiger aggressively. I am not sure if Wall Street confused the year of the Tiger with year of the Ox while SPX broke its three resistances (4436, 4453 and 4475) on a line consecutively with moderate volume, and finally allowed the oversold market taking a breath with unexpected bullishness. But anxiety around how quickly and significantly the Federal Reserve will lift interest rates has made for a volatile month for equities as investors dump high-valued, growth assets poised for vulnerability in an environment of higher borrowing costs. The S&P 500 closed the January nearly 6% lower, the Dow Jones Industrial Average was down 4%, and the tech-heavy Nasdaq ended down 10%.
Our Long-term investment portfolio downed 18.12% for the January along with 77.22% of total return since the inception of May 2020 (click for our latest portfolio performance report). while our Dynamic investment portfolio suffered -14.76% of return for the January while shrunk its total return to 35.85% since May 2020. additionally, our crypto portfolio which allocates with 50% of BTC and 50% of ETH got a -13.23% of total return since the launched date (03/31/2021). Meanwhile, our structured notes portfolio had a -9.54% of total return since 03/31/2021, but different from other portfolio, the loss/gain for the structured notes is based on current market value of its underlining assets. The actual return will be reflected by its underlying assets’ value on its maturity date, since the most of notes in this portfolio mature in 3-5 years and each of those come with different terms (duration, buffer/barriers, and the final value of underlining assets), the market volatilities would have less impacts on its actual return until the last day.
As the market found a bottom by the end of January, Wall Street’s risk appetite has tentatively returned. While still struggling to digest the implications of the coming rate hike cycle, investors are in a buying mood once more at the moment. As the Fed start fighting inflation, the only questions left are how much rates will rise, and how quickly in 2022. The Q4 earnings that made the stocks, such as Meta (FB), Amazon (AMZN) and SNAP a bunch of mega caps extreme volatile in the beginning of the February, that reflects that a solid financials condition and being consistently profitable is way important for a business during the time of market works to price in anywhere from five (Goldman Sachs call) interest hikes this year to seven (Bank of America call). There will be a price to pay for higher interest rates as it pertains to the economy and markets, which is why stocks at present are experiencing wild volatility. while stocks are trying to figure out that price, so are cryptocurrencies and housing market.
Sen Zhang
Managing Partner
