The Grinch Comes for the Markets

Amanda Heckman|December 17, 2022

The well-publicized Santa Claus rally has been the subject of much speculation over the past month.

Would Americans’ holiday spending send the markets on a tear? Or would inflation worries and interest rates lead to more volatility?

The action this week suggests that investors won’t catch a glimpse of the man in the red suit in these last few trading days of the year.

But Christmas isn’t quite canceled. As we’ll see, certain investors may still find presents under the tree…

First, a quick recap of this week’s craziness.

It was the most wonderful time of the month…

On Tuesday, we got the inflation figures for November. The consumer price index rose just a hair over October’s reading, coming in 0.1% higher. And year over year, it increased 7.1%. Those numbers narrowly beat estimates of 0.3% and 7.3%.

The markets were thrilled. The S&P 500 shot up close to 3% in early morning trading on Tuesday. Investors cheered the idea that inflation was slowing.

But then everyone’s favorite unelected Grinch took the stage on Wednesday. The Fed raised interest rates another 50 basis points, as expected. And in a move that extinguished all the holiday cheer on Wall Street, Jay Powell insisted no pivot would be coming anytime soon.

More rate hikes are coming in 2023.

Humbug.

The markets dropped after the announcement… and remained in a bad mood Thursday.

The downturn this week was significant, but Manward subscribers were prepared…

During Andy’s latest monthly video call with Alpha Money Flow and Venture Fortunes subscribers – which coincided with Powell’s speech – he showed viewers a crucial chart of the S&P 500 and its 125-day moving average.

If the S&P stayed above that average, he explained, we’d be in good shape for a Santa Claus rally… and we’d be able to ride his bullish sleigh into the new year.

But on Thursday, the S&P crossed under it… meaning a bearish trend will likely ring in the new year.

View Larger Image

This isn’t all bad news. It simply means investors need to take a different approach… especially if they’re still following textbook investing advice like the once-vaunted 60-40 portfolio.

This out-of-date strategy – which touts an unbalanced mix of stocks and bonds – has had a terrible year. One of its worst in history, in fact, as both stocks and bonds have fallen thanks to rising interest rates.

It’s something we at Manward have been railing against for years.

This week’s action only proves it further: The old way of investing is dead. More than a decade of record-low interest rates and free money has put it to bed forever.

As Andy told subscribers in our call on Wednesday, now’s the time to use a direct, targeted approach to find the best companies in a variety of sectors.

No one sector is going to outperform right now. But plenty of solid, cash-rich companies will.

And with Andy and Alpesh as your guides… you won’t have any trouble finding them.

Forget the Grinch. Manward will give you plenty of reasons to be merry in 2023.