Individual Stock Discussions

2022 Q4, total returns. “At least I wasn’t in crypto”

Many stocks recovered somewhat from their lows in Q3, although many riskier tech stocks, lead by TSLA, fell further. Gold did well, while fixed income suffered slightly.

ticker type Q4’22
EFA foreign (developed) +15%
EEM foreign (emerging) +9%
GLD gold +7%
SPY large caps +5%
JNK junk bonds +4%
IWM small caps +3%
USD cash +1%
CPI inflation (est) +1%
BND bonds -1%
PFF preferreds -2%
QQQ tech -2%
BTC bitcoin -15%

handy link for these

Here are the 2022 yearly numbers:

ticker type 2022
CPI inflation (est) +7%
USD cash +2%
GLD gold -1%
JNK junk bonds -12%
BND bonds -13%
EFA foreign (developed) -14%
SPY large caps -18%
PFF preferreds -18%
IWM small caps -20%
EEM foreign (emerging) -21%
QQQ tech -33%
BTC bitcoin -63%

Q4 went quite well and I ended up with a decent gain for the year.

S&P500 stocks YTD - energy, defense, and healthcare green. most others red.


image

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See the green in the energy box. Exxon XOM up 82%, Chevron CVX up 53%. The vanguard energy ETF VDE was up 51.4% in 2022

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Yeah, Exxon, Chevron, etc did well, but Armand Hammer’s the man. Paranoid … maybe, but that doesn’t mean they’re not out to get you. And one heck of a run in 2022.

ETA: “was the man.” I knew he was dead, but did not realize it was that long ago.

He had great name for lovers of puns. Here’s what Wikipedia says about his name

Hammer originally said that his father had named him after a character, Armand Duval, in La Dame aux Camélias , a novel by Alexandre Dumas. According to other sources, Hammer later was said to be named after the “arm and hammer” graphic symbol of the SLP, in which his father had a leadership role.[16] Late in his life, Hammer confirmed that this was indeed the origin of his given name.[1]: 16

Edit. SLP = socialist labor party

He got so tired of people asking him if he owned Arm and Hammer baking soda that he bought enough of an interest in the company to get a seat on the board.

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Banks are under stress as SI a crypto heavy bank is being liquidated and SPY member and previously a $15B mkt cap Silicon Valley Bank SIVB crashed -70% when they suffered large interest rate losses on their bonds and mortgages, tried and failed to raise extra equity, and triggered a run on the bank as prominent VCs told their clients to pull their cash out ASAP.

I was short very late to both SI and SIVB but am doing well on those. Crypto is a one off, but I bet there are lots of normal banks with big losses on their boring bonds and mortgage from the rapid, and rising Fed rates and future rate expectations.

And SIVB got seized by the FDIC less than 6 hours after the post above. They’d are expected to go bankrupt this weekend and wipe out all their shareholders and half their bonds as well. Depositors are probably ok, but those over $250k (the average account was $4M, it’s business bank mostly) will have to wait longer for things to get sorted.

The moves in other risky banks were dramatic and I traded them poorly, but I held my SIVB short and it’s likely to be a zero in pretty quick order. Other possibly distressed banks include SBNY FRC PACW WAL, and maybe also ZION SCHW too.

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Any characteristics in common among these shaky banks? I’d imagine most banks have a sizable amount of 10-year treasuries under water in their books. What is unique at these banks?
–TIA

High losses relative to equity, low levels of insured depositors (who therefore might be worried), etc.

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Here’s the JPM research piece those charts are from

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We could have more runs on the bank this week. Any educated guesses what the FDIC, Fed, and Treasury Department would do to soothe fears/avoid panic?

I think we have to allow people and companies to pay the consequences for their poor decisions.

The bank apparently bought long term bonds during the fed’s quantitative easing. Even at the time, any reasonable person could see the historically low long term rates were unsustainable. They should have accepted the slightly lower yields of short term tbills for part of their portfolio instead of taking the risk with all longer-term securities.

The venture capital backed firms who deposited hundreds of millions of dollars in the bank without doing their due diligence also need to pay the consequences for their mistakes.

The parties to these mistakes need to bear the consequences instead of expecting the rest of us to bail them out at the expense of higher inflation for the whole economy. The FDIC should fulfill its commitment to insure up to $250,000 but no more. If other banks lose deposits then it so be it. Savers need to do their diligence to be sure they invest in sound banks.

FRC getting run, not sure it’s big enough to take them down. They’re at risk tho.

They put out a defense saying everything’s fine.

https://ir.firstrepublic.com/static-files/295faa27-f208-4936-81ff-6c8bfa0fb6b5

There won’t be a bailout for SVB, as per Secretary Yellen:

If the public panics, the bank is toast whether or not they’re indeed solvent.

I have some (small amounts) with Ally in their money market, and no penalty CD. Do you know whether their MM is covered by FDIC? I’m unsure about the status of MMs in general.

Politics at work. I don’t necessarily disagree with this decision, but you can bet that if the clientele wasn’t a combination of tech unicorns and wineries, that the calculus of the decision might be a bit different.

Agreed. If the contagion spreads to other regional banks that serve average people, there might be a change in policy. But how bad does it have to get first? Reminds me when Treasury implemented rescues after Lehmann went belly up and markets began to freeze.

Checking the FDIC insurance status of an account needs to be part of opening it. If you do not have the terms and conditions you probably received when you opened the account, it is worth a visit to their website. If that does not clear it up, give them a call but be sure you get whether the account is insured in writing. If it is not insured, I suggest you pull your money out.

Average people dont have accounts that exceed the insurance limits and need to be bailed out.

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Generally, money market accounts are insured no differently than savings. Money market mutual funds are not. Not sure how many, if any, exceptions there are to that ‘rule’.

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