Eugenio Catone @CatoneEugenio: "March ended with a decline..."

Italy

March ended with a decline of slightly more than 5%, in line with the drop in major U.S. stock indices. Clearly, the war in the Middle East is having a negative impact; in fact, it is driving energy costs sky-high at the expense of companies/households. Furthermore, since rising oil prices are historically correlated with rising inflation, the likelihood of a rate cut has vanished. A rate hike is no longer out of the question. As long as the war continues, I don’t expect a full recovery in the stock market, but only positive days within negative weeks. Unfortunately, since the U.S. isn’t the only player involved, I expect that peace is still a long way off and not a matter of days. So, what should we do? Sell everything and buy back in once the war is over? Obviously not; by the time the war ends, the stock market will have already skyrocketed. The bottom will be reached at the peak of the escalation, and I don’t think we’ve reached it yet—which is why I still hold a significant amount of cash. April 10 will be an important day because we’ll see how this war is impacting inflation in the U.S. In Europe, we already saw it yesterday; in fact, the energy component in March was significantly higher than the previous month (+4.90%, -3.10%). Overall, it’s not a great time for the stock market, but to be honest, I’m not worried about a 5% drop; it’s perfectly normal if you invest in stocks and are coming off three years of uninterrupted gains. Panicking is the last thing I am going to do, and as far as I’m concerned, I’ll keep doing what I’ve always done: buying the dips in the world’s best companies. If Meta were to reach $500 per share, I might increase my position. I also have other companies on my watchlist, including Coca-Cola and Philip Morris, but I’m waiting for their valuations to come down. Bottom line, I remain optimistic despite the downturn and I am prepared for further declines. $SPX500 $NSDQ100 $META (Meta Platforms Inc) $KO (Coca-Cola) $PM (Philip Morris International Inc.)

Not investment advice. The author may have financial interests in the mentioned instruments.