Investing Update: Q1 Recap
What I'm buying, selling & watching
Thursday ended up being the worst day the market has seen since March of 2023. That made 4 straight negative sessions to start the week as oil continued to climb. On March 16th, I wrote about if energy is becoming the new market leader, Investing Update: Is Energy The New Leader? I think we now have that answer.
Over the last week the XLE is up over 4% and the past month up over 12%. It’s up 8 weeks in a row and has hit its first all-time high in 10 years.
Things then changed on Friday as a strong jobs report bounced the market higher to end the week. The US economy added 303,000 jobs in March vs 212,000 expected. That makes 39 straight months of jobs growth! The unemployment rate dropped to 3.8%. That’s now 26 straight months that the unemployment rate has been below 4%. Wage growth of 4.1% now stands ahead of inflation at 3.2%.
Market Recap
The Bull Market Cycle
A lot of talk has been about where we are in this bull market cycle. I continue to hear how late it is and how it’s become a bubble now. This outstanding chart from Jurrien Timmer tells us exactly what time it is in the average bull market cycle.
“Another way to visualize the cycle is to show it as a clock. If 12:00 is the start of the cycle, compared to the longest cycles in history, it’s only around 3 pm right now. Based on the average cycle, it’s 6 pm. Time is still on our side.”
Then Willie Delwiche put this chart together in which he says the following. “Last two times the II bull-bear spread climbed as high as it is now the peak in price was 9 or more months in the future. Elevated optimism in bull markets is a feature not a bug.”
This bullish cycle may be much earlier than many think. In that case, any pullbacks should be viewed as strong buying opportunities.
Q1 Charts
As the book closes on Q1 of 2024, we really need to fully understand just how good so much is right now. Few times in my lifetime can match where things are at. Look at this list and try and tell me otherwise.
Stock prices (S&P 500, Nasdaq & Dow) are at an all-time high
Bitcoin is at all-time highs
Gold is at all-time highs
Housing prices are at all-time highs
Net worth is at all-time highs
The unemployment rate is under 4%
Economic activity is at all-time highs
Air travel is at all-time highs
You can get 5% on your cash
Through the first quarter (61 trading days of the year), the S&P 500 is off to its 14th best start ever. During this entire time, the S&P 500 has stayed within 2% of an all-time high.
Of the 500 S&P stocks.
414 stocks are above their 20-day moving average
422 stocks are above their 50-day moving average
417 stocks are above their 200-day moving average
Wall Street’s S&P 500 predictions for their year-end price targets have not kept up. The current level is 8% above the average 2024 forecasted price target.
Here is the list of the 20 best performing stocks in the S&P 500 through Q1. Nvidia and Meta are still near the top. Disney has started to find its footing as well of late.
These are the best performing stocks in the Russell 1,000 through Q1.
Here is the list of the 20 worst performing stocks in the S&P 500 through Q1. A few surprises on this list are Tesla, Lululemon, Adobe and Nike. They’ve had a very rough stretch and may be offering a good point to buy.
These are the worst performing stocks in the Russell 1,000 through Q1.
This is a great bubble chart that shows a visual of the Q1 return of stocks in the S&P 500. 363 finished positive and 138 have gone down.
From a sector performance perspective we can see that communication services, energy and technology led the way. REITs which were the only sector to finished negative led the laggards, followed by utilities and consumer discretionary.
Then we finish with one of my favorite charts. The Asset Class Quilt of Total Returns goes back to 2000 and is sorted by the best performer on down to the worst. After commodities led in 2021 and 2022, the S&P 500 has taken the leadership spot in 2023 and so far in 2024.
Q1 Recap
As the 1st quarter concludes, I wanted to look at where my portfolio is at, as well as my three stock picks for 2024 versus the major indices. This is all through Q1.
Dow: 5.55%
S&P 500: 10.79%
Nasdaq: 10.93%
My Portfolio (Actively Managed): 15.67%
My 3 Stocks For 2024
Alphabet: 9.24%
CrowdStrike: 29.85%
Home Depot: 11.16%
Here is the link to my 2024 stock picks article.
Investing Update: 3 Stocks For 2024
Biggest Q1 Surprise
The biggest surprise to start the year came down to the two surprising Magnificent 7 stocks and how much they’ve lagged the overall market in Apple and Tesla. Tesla was actually the worst performer in the entire S&P 500 in Q1.
Apple meanwhile finished the first quarter down 7.63%, while the S&P 500 was up 10.79%. Nobody could have predicted that. Not that long ago Apple was the key to the market. That time seems to have passed and it’s the biggest surprise of Q1.
Moves I’ve Made
Lululemon I added to my position in Lululemon with buying another block of shares at $363 on Thursday. It took another leg lower after Jeffries floated the idea of it becoming the next Under Armour. I found that as laughable when you compare what happened to Under Armour to what Lulu is.
Lulu’s trailing P/E has now fallen to the lowest level since 2017. Its EBIT is now at 18x forward. It’s also one of only 6 S&P 500 stocks with a RSI under 30. To me this is a great buying opportunity. I don’t think it stays here for very long.
Upcoming Earnings & Data
The Q1 2024 earnings season kicks off next week with the banks reporting on Friday.
The Coffee Table ☕
I just finished reading the book Unreasonable Hospitality by Will Guidara. What an entertaining and interesting book. It tells the story of Eleven Madison Park’s rise to the title of the best restaurant in the world. They really transformed the restaurant industry. It’s a great book to really make your mind wonder what you can do different to stand out, create different ways to do something which can transform your business or even an entire industry.
What has happened to reading? Time spent reading has been falling since 2004. With the rise in social media usage and short form videos and streaming, it looks like the time spent reading has been cut. I have recently started to reintroduce consistent book reading back into my daily routine. I’ve always learned so much by reading.
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