Originally published on September 26th 2022
ESGFIRE returns since 2018: + 1150 %
ESGFIRE returns Year to date 2022: +10 %
After having bottomed out in June the global markets began , what we now can call, a bear market rally. That bear market rally hit its peak around the 16th-18th of August and since then some , but not all, major indexes have seen lower lows which implies this downward market still might be heading even lower.
So, is everything doom and gloom? Of course not!
Although this is a market update we can tell you that the ESGFIRE portfolio has consistently found great bargains and has invested the majority of our cash reserve over the last month. Can the market still go down even more? It sure can. However the bargains we’ve made all have many short term catalysts, more about this in our upcoming portfolio update which will be published early in October.
Central banks globally are on a rate rising rage. What worries us about this is the fact that their rapid rate rising that has the goal of lowering inflation is infact crushing demand which could cause deflation as soon as in 2023 . Deflation is the general decline of the price level of goods and services. Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to increased productivity and technological improvements.
To save you a lot of time we have greatly simplified what is happening in the energy markets right now:
Oil prices are falling due to recession fears globally. Natural gas prices in Europe remain very high (even after dropping) due to actions by Russia limiting capacity in the gas pipelines to Europe. However on a month to month basis energy prices are down between 12-36 % across the board of the different oil/gasoline and natural gas sectors.
As for the global food prices, the United Nations reported a few weeks ago that prices had dropped for a 5th consecutive month. However they still remain 80 % higher than one year ago.
Monkeypox luckily seems to have fizzled out by itself. The disease was not as lethal as initially thought and even a month after most schools open we have luckily not seen a rise in death or severe disease in children.
What also has given us reason to believe we may have bottomed out , or atleast slowed the bleeding, is that the Fear and greed index is currently pointing towards extreme fear. The Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The theory is based on the logic that excessive fear tends to drive down share prices, and too much greed tends to have the opposite effect.
When everyone is bearish, that’s the right time to become bullish!
Nobody can predict where markets are heading with certainty. However we do believe ESG investing is the future and that there are many good investing prospects available out there!
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