The advice is sound, very sound. Move part (at least of your portfolio to cash and sit out the worst of this bear market on the sidelines. And since you have that cash in hand, you’ll be ready to snap up bargains when the market has put in a bottom (or near the bottom, or on the way up from the bottom…or something.) But right now that’s easier said than done.
I can’t find Big Pharma stock in the green during Friday’s big rally. Which makes me question the staying power of Friday’s move. If the day’s gains were the result of a market bottom, wouldn’t everything be up? Even the very defensive drug stocks? Not as much as the tech losers of 2022 but still if the market had bottomed I’d expect these stocks to be in the green too. More evidence, I think, for my thesis that Friday was the result of technical trading in an over-sold market.
Going into this earnings season, the hope was that strong, surprisingly strong perhaps, earnings from the big growth stocks would put a stop to the selling. Earnings would be strong enough to convince investors that the market wasn’t over-valued since at these growth rates stocks would be seen to be quick growing into current extended valuations That hasn’t exactly worked so far. But this week the earnings story from growth stocks hits its stride. If the companies reporting this week can’t make the case for growth stock earnings, there probably isn’t a growth stock story to be made in the light of Federal Reserve interest rate increases, supply chain disruptions, and fears of a recession.