The market was deeply oversold as Q4 ended, then lots of money flooded back in as tax loss harvesting pressure weakened. So we have this so far one month plus one week boom in the markets.

Question is, how sustainable is the rally? Some of the technicals do look good, and it seems as though the terminal interest rate will be roughly 5%+. So, unless we see a spike in unemployment with a drop in household income, at this time it’s hard to see how we’ll enter a recession.

A very interesting macro picture right now.



Yes! And that is an excellent point.

In lab when we go through CAPM I ask the class to individually calculate expected returns, but refuse to specify an index. They have to select an index and justify their choice.

And then, when we review results we see a wide range of expected returns. Using SPX or OEF or even INDU yields different, sometimes very different results. Working through this students get it, they can see the flaws of that simple model.

I hadn’t thought about having them create their own index i.e., your point “stocks of similar nature”, so (hope you don’t mind) Imma gonna steal it. Will credit you in 4 point type at the bottom of the slide.




Dave Coker

Retired Investment Banker, Deutsche Bank, ABN AMRO, Moodys, now University Lecturer in London. Financially independent student of markets. American / British.