The S&P 500’s drop on Friday marked its most downside volatility since 2009. September’s 9.3% decline for the S&P was its largest one-month percentage decline since March 2020. The market tried to rebound on Wednesday following emergency intervention by the Bank of England in the last week of this quarter but failed as market broken-down to the new low of 2022. Moreover, talks of trouble brewing at Swiss investment bank Credit Suisse gained ground over the weekend, with rumors of Lehman-like collapse beginning to spread around, it seemingly economy could not get any worse at this moment.
the S&P 500(SPX) hit its 200 WMA on the last day of the 3rd quarter, there were only three times that SPX broke down this long-term support during the time of Tech Bubble (2001), Financial Crisis (2008) and Covid-19 recession (2020) for the past a few decades. In most cases, the index would bounce around at its 200WMA and got recovered eventually, such as 2011, 2016 and 2018. We have NO idea how bad worldwide problems could be, inflation, supply chain crunch, Ukraine War and Nuclear threat, European energy & financial crisis and slowdown China market…… but pay more attention to this key support will help us determine if the condition worsen.
On the other hand, we need to prepare that we’re going to have inflation problems for quite some time to come (-Larry Summers). In this scenario, the market could consolidate within a range for a quite long time, a buy and hold strategy which have been familiar by most might not work as well as recent decades, a more active investment could be restored, adjusted and fit during the volatile period.
Following by the brutal September decline, our Long-term investment portfolio declined -12.45%, made its total return to 25.92% since the inception, May 2020 (click for our latest portfolio performance report). Our Dynamic investment portfolio downed -8.7% made its total return to -6.94% since May 2020. The correlation between bitcoin (BTC) and SPX is increasing as BTC failed to regain to its uptrend on Sep 12th. our crypto portfolio which allocates with 50% of BTC and 50% of ETH downed -62.4%% since March 31st, 2021. The structed investment portfolio downed -6.28% in the 3rd quarter. as the market is getting more volatile, more conservative investments have been customized, some of which have 100% principal protection in both growth and income categories to allow the investors acquire returns with minimum risks.
the Fed has clarified its intentions to keep raising rates and given that the next policymakers’ meeting isn’t until Nov 2nd. It’s the time not about inflation and central banks only but companies’ earnings, Analysts predict the S&P 500’s earnings growth rate for the third quarter will be just 3.2% that would be the lowest growth rate since Q3 in 2020. If this the case, the pressure will go on, and we have to focus on the long term as well.
Sen Zhang
Managing Partner
Corrigit Capital Group