The look thru trade

What to “look” for!

The “Look thru trade”

This week we learned the collective Fed’s around the world are gunning for inflation. We knew that, but it was a loud clarion sound that pounded the markets this week down about 5% across the board.  Last week we said investors and traders would be wise to be patient and faced two choices:  1) wait for the 2Q reset where companies would give outlooks for their businesses in this “deteriorating economy” or 2) wait for the “look thru trade” to arrive based on a material change in the inflation picture (either Russia related or commodity related).  Obviously, there is a third choice which is to stay invested in the names you want to ride out during this tumultuous period and know the risk-reward you assign on each.  This process allows you to “upgrade your portfolio” moving capital by selling some losers, take capital losses for taxes and re-allocate to better names you deem fit for the current investing climate.  The upgrading your portfolio process also forces you to see the composition of your holdings and how much correlation overlap you have between securities.  Maybe this will be a topic of a future write up?  For today, let’s discuss below the “look thru trade” potential ahead.