We Have an Important Couple of Weeks Ahead of Us: Market Commentary from Cabana’s CEO – November 23, 2022

2 weeks ago

  • Share this:

As we head into the holiday season, let’s start this commentary by acknowledging what matters most – our friends and family. All our successes and failures in life are meaningless without the people who are there to share them. The older I get, the more this hits home. Today, I want to say a special thank you to my wife, who has supported me through thick and thin and lifted me up when I have fallen. She was doing it in 1986, and she has done it this year. I want to thank my mother who believed I could do anything and instilled that belief in me. I want to thank my children who amaze and teach me every day. I am blessed. Lastly, thank you to my advisor partners and clients who have trusted us with their reputations and hard-earned money. I do not ever take that for granted and work to earn it every day. 

The stock market’s major indices are working to digest the gains seen following the October CPI report. I suggested last week that we needed to see markets hold the gains and, importantly, test previous levels of support. For the S&P 500, that level is 3900. We saw that test last week and we survived. I also suggested that it would be a positive if that index could close above 4000 on an end of week basis. We saw yesterday’s close right at that level. All of this looks constructive to me and consistent with a year-end rally. The Dow and Mid Cap indices have cleared their 200-day moving averages. The S&P 500 is closing in as well. If we can somehow see it close above the 4050 level, I think we have a legitimate shot at the August highs, which were at 4300. As I see it, that in and of itself would be a major accomplishment, but it is by no means assured. We have a lot of data and the Federal Reserve in front of us over the next two weeks. I suspect that inflation numbers and the corresponding Fed interest rate decision will carry the day. For now, data seems to indicate that inflation has peaked and is trending down. The bond market is expecting a smaller increase in rates and if this plays out as expected, we may be good to go.  

Make no mistake that we remain in a technical bear market and would need to see the S&P 500 clear 4300 for that to change. I for one will be glad to see 2022 end, but I am sure that 2023 will present significant challenges. A recession seems imminent to me, and it remains unclear whether we have discounted its severity. Markets are looking forward, and they will ultimately show us the way. 

Happy Thanksgiving, everyone! 

Disclaimers

June 22, 2022

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of CabanaThe opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.  

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV Part 2A or Form CRS. A copy of which is available upon request or online at www.adviserinfo.sec.gov/. 

Past performance is no guarantee of future results. All investment strategies have different degrees of risk and the corresponding potential for profit or loss. Asset allocation and diversification will not necessarily improve returns and cannot eliminate the risk of investment losses. “Target Drawdown” is merely a descriptive term used to describe the general strategy and objective of the portfolio, it is not a guarantee, nor should it be construed to suggest safety or protection from loss. There is no guarantee that portfolio performance will remain consistent with the targeted drawdown parameter. While risk tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account and there is no guarantee that Cabana’s strategies will be suitable for any investor. Investors and advisors should not simply rely on the name of any portfolio to determine what is suitable. It is the responsibility of investment advisors to determine what is suitable for their clients. Cabana manages assets on multiple custodial platforms. Performance results for specific investors will vary based upon differences in associated costs and asset availability.  

Cabana claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a trademark of the CFA Institute. The CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. To receive a GIPS Report and/or a firm’s list of composite/pooled fund descriptions please email your request to info@thecabanagroup.com.

All recommendations made in the prior 12 months are available upon request. Cabana’s allocation history is available here. For additional information regarding our services, including performance disclosures and award methodology, please visit https://thecabanagroup.com/disclaimers/. 

Commonly used index/benchmark definitions:  

All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

Morningstar’s Tactical Allocation category includes portfolios that seek to provide capital appreciation and income by actively shifting allocations across investments. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. 

The S&P 500 Index is a market-capitalization weighted stock market index of 500 widely held large-cap stocks often used as a proxy for the U.S. stock market.  

The Russell 2000 and 3000 indices are market-capitalization weighted stock market indices that include, respectively, 2000 and 3000 of the most widely-held stocks and are often used as proxies for the U.S. stock market. 

The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq