Where to start this week...?
Maybe with Russia invading Ukraine? Or how about the highest inflation in four decades? When the Fed will hike rates? The recent decimation of growth stocks? Re-opening our economy after two years of a pandemic?
That would all be too easy, so let’s discuss this crazy pickle ball fad.
_______________________________________________
Pickleball participation grew by 21.3% between 2019 and 2020, prompting the Economist to declare it "the fastest growing sport in America." 4.2 million Americans now play at least once a year.
It’s interesting to drive by the Bobby Riggs Tennis Club (rated as the best pickleball club in the United States in 2020) on Santa Fe Drive here in Encinitas and see the jam-packed pickle ball courts, even though it looks from the slightly different vantage here at my office like the whole darn world is playing pickle ball.
What I mean by that is that we’re all playing defense this year. Tennis is like investing in a bull market; pickle ball is like investing in a bear market.
In tennis, the ultimate outcome is determined by the actions of the winner. Tennis players endeavor to hit the ball hard and with precision through long and often exciting rallies until one player is able to drive the ball out of the reach of the other player or to force the other player to make an error.
But pickle ball is totally different. The outcome is determined by the loser. The court is just too small-- most points end with the ball being hit into the net or out of bounds. Instead of trying to add power to one’s serve or to hit closer to the line to win, one has to concentrate on simply returning the ball consistently. The victor in pickle ball gets a higher score because the opponent is losing even more points.
To summarize,
“Always try to keep the number of landings you make equal to the number of take offs you've made.” McGill University Physics’ Rules of the Air
_______________________________________________
With that in mind, it is significant to note that the Fed has never successfully hiked its way into a soft landing. Ever:
The last time inflation was here, the Fed Funds rate was 14.78%. Gold has been surging because it knows what happens after the rate hikes end.
To summarize,
“Every time I get accustomed to low volatility, like we were towards the end of the Greenspan era, and we think we have all the levers under control… Something erupts to remind us that the idea that anybody is in control of everything is hubris.”
Lloyd Blankfein
_______________________________________________
Last Thursday, in the parlance of Wall Street, the Russia-Ukraine conflict transitioned from a 'known unknown' to a 'known known', and markets showed some signs of embracing the diminishing uncertainty. I still see just about everything that anybody bought that morning as a short-term rental, though; we continue to expect 2022 to be choppy due to inflation, the Fed and slower growth.
To summarize,
“Buy on the sound of cannons; sell on the sound of trumpets.”
Nathan Mayer Rothschild
For disclosure information please visit:
Comments