On Thursday, the market cheered the 7.7 percent inflation rate announcement and we took the opportunity to sell positions that were profitable. What did we sell? We sold our positions in Prudential (PRU), Archer Daniels (ADM), BorgWarner (BWA), and Skyworks Solutions (SWKS). All of our sells were profitable.
Why did we sell? A few reasons:
- The meltdown in crypto has significantly increased risk for markets, there were many pension funds that had money in crypto and fear begets fear and could lead to cascading chain reaction of sell offs.
- Inflation is still BAD – While the market is opening up Champaign bottles celebrating the demise of inflation, there is still a war in Europe disrupting oil and gas, winter is coming, and supply chain issues still exist. We also have a labor shortage across the U.S. that is inflationary.
- Deflation is WORSE – If we were to assume that inflation is contained it is only so because there is far less consumption happening and this in turn means lowered earnings for companies across the board which would make stocks fall.
- Housing is still getting crushed.
There are simply too many unfavorable risk factors for us to not to take some money off the table. We intend to get back into the stocks we sold but only after the market has corrected. In a future post, we’ll share our targets for all the stocks we intend to buy when the market corrects in 2023.
What did we not sell? We have positions in: BP, BBN, BMY, CMCSA, CSCO, EWJ, GILD, HPQ, ILPT, LOCO, MATV, NEA, RY, STT, SWK, TSN, UGI, VFC, VZ, WBA.
In the meantime, stay tuned and stay solvent…