Indices catching up to reality? (NOTW#84)
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Indices continued “catching up” this week to the conflict in Iran. I give some thoughts about this topic in the market commentary and also share some company-specific news later.
Without further ado, let’s get on with it.
Articles of the week
I published one article this week: ‘Adobe’s Identity Crisis: Growth Stock or Falling Knife?’.
Adobe’s Identity Crisis: Growth Stock or Falling Knife?
If you’ve been following Best Anchor Stocks for a while, you’ll know that I have held Adobe for some time (with only the sizing of the position changing all throughout). A couple of weeks ago, I shared my decision to sell the position with subscribers. The reasons behind this decision could be summarized in the following:
Adobe is apparently cheap, but the past should never be used to justify its valuation (especially in such a fast-changing industry). I go over both the bull and bear cases and I highly recommend reading if you either have a strong view on either side or if you are watching from the sidelines. People with strong views on either side are probably not going to be transparent with the other side of the coin.
Without further ado, let’s see what the markets did this week.
Market Overview
In last week’s NOTW I wrote the following:
Despite these drops and the fact that there’s a full blown war in the Middle East that is causing oil prices to rise considerably, indices are “barely” 6% off highs.
Indices continued “catching up” this week to the conflict and dropped more than 3%:
The Nasdaq is now approaching correction territory, but the S&P remains “far” from it (albeit it could get there fast, we know how this works):
With no material improvement in the news flow coming from the Middle East, I am still under the impression that the market is pricing in a “soft” resolution to the conflict. It’s honestly very hard to know where this will lead us. Some media outlets are claiming that the US is about to send ground troops to Iran, whereas others claim that the resolution will not take long. In the meantime, Iran and the US continue to send contradictory messages. My father always told me that the first War victim is always the truth, and I think he might be on to something!
We’ll only know if the market is right/wrong with the benefit of hindsight, but I must say that I am still leaning into the “everything-will-be-fine-eventually” camp. As discussed in last week’s NOTW, western societies have limited suffering capacity, and so do their political leaders. This means that it’s unlikely that we’ll remain in the “stress zone” for long. Now, all this said, one never knows if things can spiral out of control, but I tend to believe that humanity tends to find its way through, eventually. I would love to get great opportunities in some names to continue adding or to continue making my positions larger.
The industry map was mostly red this week:
The fear and greed index worsened again and is in extreme fear. Together with the VIX rising significantly, it potentially means we are getting to attractive territory in terms of sentiment:
I sold a position this week
This week, I fully exited one position after losing trust in management. The context also matters: I simply believe there are better opportunities across the portfolio to deploy this capital: