Blog | CB Investment Management

Q3 2022 Review. Insight Track Record. Q4 2022 Outlook.

Will Instability Break Central Bank Inflation Fighting?
It Already Has In The UK.

The Fed Is Underplaying the Pain of Inflation Fighting
Bill Dudley

“All those factors that cause a bull market, they’re not only stopping, they’re reversing every one of them. We are in deep trouble.”
Stan Druckenmiller

My Track Record Over the Last Year

Money Show (October 20, 2021) What The Fed Was Missing, And What Was To Come.

I explained the key inflation predicament we were in, six months before the Fed tightened interest rates.

I also indicated why the US stock market rally was not quite over yet. The rally in the S&P 500 continued into year end 2021.

I provided a 6 month warning that a stock market reversal was coming and risk management would become essential. I also demonstrated risk management techniques.

Best Investor “Weekly Insight” Blog Highlights

I have remained on track with the evolving market developments ever since with my Best Investor Weekly Insights” blog chronicled on my web site.

Inflation Policy Extreme. Reflation for now. (October 25, 2021)

2022. The Banquet Of Consequences. (December 2, 2021)

2021 Stimulus Policy Extreme (December 25, 2021)

A rising rate of change in both growth and inflation (quad 2),  in place for most of 2021, has ended. The outlook is some combination of “goldilocks” (quad 1) or “deflation” (quad 4). Make sure your allocation is shifting appropriately.”

Here was a clear signal at that time…

Most Reckless Fed Ever (January 14, 2022)

It is worth enumerating all the ways in which stimulative policy has reached record excesses. This is now what we are trying to work off!

Q2 2022 Growth collapse virtually assured (March 18, 2022)

The Fed may be as wrong on growth now as it was on inflation last year.

We now know that Q2 2022 had the second consecutive quarterly decline in GDP growth.

Asymmetric Options Trades. Inflation Noise. Bank Signal Deepens. (August 12, 2022)

How to reallocate your portfolio after a bear market squeeze.

It may be that after the recent equity rally, this is a good place to protect your equity portfolio from another downtrend. If so, the rise in interest rates so far can help cover the cost of equity put options.

Why Won’t The 2020s Be Worse Than The 1970s? (September 8, 2022)

Typically stocks bottom well after the first interest rate cut, which may take more time than is priced in to markets today.

Given the debt levels, it will be much more difficult to reach the real interest rates levels needed to contain inflation.

Outlook

The Fed was very late to start raising interest rates, the US now has record debt, and the economy has been weak since the beginning of 2022, but the Fed has been very aggressive in the speed of interest rate tightening.

The speed of Fed tightening has shocked the bond and currency markets. Bond volatility is breaking the highs of the Covid shock two years ago.

The Fed moved faster than other key central banks which has strengthened the US Dollar.

Dollar strength intensifies the policy problem internationally. Five year UK government bond yields have gone from zero to above 4% at an accelerating rate, as the British Pound has collapsed 30% to a new all time low against the US Dollar. Currency weakness only intensifies the UK inflation problem, which is already worse than in the US.

The US and world economy is already weak and is likely to get weaker with policy tightening across most of the world in the next 6 months on current settings.

Credit growth is sending a clear message of recession,

Something is likely going to break

There are clear economic limits to the ability of central banks to contain inflation but so far the central banks do not appear to recognize any reason to change their inflation fighting priority.

Nevertheless, it is hard to see central banks sticking to the current track indefinitely. Indeed, just this week the Bank Of England had to “temporarily” reverse its QT.

It won’t be QE, it will be “restoring financial stability”. It won’t be YCC, it will be “fixing market dysfunction”. It won’t be a bail-out, it will be “exigent & unusual circumstances”. It won’t be indefinite debt monetization, it will be “a targeted, limited intervention”.
Matthew Pines

The chart below shows the historic drawdown that many investors have experienced this year, if they have passively invested in mainly stocks and bonds as is the standard investment approach.

How can you ever really enjoy and relax about your current wealth and investment future unless accountability to capital preservation is hard wired into everything you are doing? Capital preservation must be your number one priority, as it is for all Best Investors. Does this mean you will make less in the long term? No. It means you will make more! It’s all in my book – Invest Like The Best: Low-Risk Road to High Returns!

The chart below shows the accumulation of passive investments does not seem to have changed despite the devastating losses, which will likely be hard to recover and may still not have reached a low.

Summary – Crisis In Investment Management

My “Invest Like The Best” book was published in February 2021, at the peak for US growth stocks in the biggest bull market in history. It exposes the widespread weakness of most investment management strategies and provides a straightforward alternative based on the approach of the most successful investors of all time. It transforms investors performance by incorporating capital preservation as a primary focus, with real time accountability and transparency.

Passive investors, and those who allocate to risk as a single factor are experiencing losses that will likely damage their returns for several years. Any large drawdown severely damages an investor’s ability to compound positive returns over the long term. There is another way, and it is adopted by the Best Investors.

If you’re not already a client of CB Investment Management, schedule a FREE consultation today. Let me use my expertise and multidecade experience to apply Best Investor risk management methods to navigate your portfolio for the uncertain and potentially challenging conditions ahead.

Please note these important disclaimers: Educational use Only. The market update published by CB Investment Management, LLC (“CB Investment”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with CB Investment is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice. Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. CB Investment assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by CB Investment to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Important Information regarding Registration Investment advice is offered through CB Investment Management, LLC (“CB Investment”), 8231 Crestwood Heights Drive, Mclean VA 22102 an investment adviser registered with the states of Virginia and Maryland. Registration with the states of Virginia and Maryland should not be construed to imply that the SEC has approved or endorsed qualifications or the services offered, or that its personnel possess a particular level of skill, expertise or training. Important information and disclosures related to CB Investment are available at https://old-site.chris-belchamber.com.

Best Practice is a matter of your Best Interest.


Education and a Commitment to Informed Consent is an Obligation.

Chris Belchamber is an IRMAA Certified Planner

Medicare’s IRMAA impacts every retirement plan. Learning how to mitigate it is available via IRMAA Certified Planners designation.

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