To The Moon

As the accelerated Fed taper is underway and now, the additional component of trimming its balance sheet (ie it will offload the billions of dollars of bonds it bought), the market players must now entertain re-valuations of their holdings (essentially, a valuation reset is needed). 

What used to be acceptable at a 300 P/E or 100 P/S ratio when money/liquidity was easy can no longer be the case as easy money recedes. Whatever valuations for secular compounders or growth stocks must now come right down, no two ways about them. 

Some employ DCA or dollar cost avg which is good. It may be more useful to allow the indices to rollover first and valuations come into more acceptable territory before handling that front. Again, the reversion to valuation fundamentals, proper risk management are all part of the exercise. We need to entertain accepting more pain within this H1 2022 whilst having the war chest ready to pull into beaten up quality businesses. 

Rising interest rates will hurt growth businesses that have high revenue growth but correlated losses that move alongside the growth. Be mindful of those as they will need to borrow money to run the business and the costs of borrowing will eat into margins. This will be part of the discounting that you will have to do as you plough into these businesses. 

No easy way out but the market is what the market is. We need to adjust and work our way through the shifting tides.