New Address as of 10/4/24 — 60 Broad Street, 39th Floor, New York, NY 10004
DJIA: 47,955
The smell of Napalm in the morning… how many mornings? Our less than scientific take on consensus is pretty much the worst is over. This, of course, was abetted by an obscure story Wednesday that in the midst of burying their leader and seemingly without one, Iran was looking for a deal. If you are of a certain age, that being old, you will recall that during the Vietnam War there were a number of rallies when “peace was at hand,” all before we went crawling out of there. We are skeptical but hopeful and more to the point, numbers Wednesday were hopeful as well. Then, too, Thursday showed one day is just that.
The overriding problem we see is the distinction between anticipated and discounted. When Russia invaded Ukraine stocks rallied sharply. The event was anticipated, and the weakness before the event meant it was discounted. Iran was anticipated – prediction markets gave it a 70% probability and oil hit $70/barrel for no good reason. However, stocks had not sold off to discount the event.
A couple of obvious winners in this have been Oil and Defense stocks. We would not chase Defense, but we would chase Oil. The Defense stock story is pretty well known, Oil is yet unknown and therefore with potential. Generally, we like Commodities and Staples, but there are plenty of good stocks. Unlike last year, most of them are not Tech.
Frank D. Gretz
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