August 2022 Mid-Month Update: Bear Market Rally?

The last two months have been a relief for most investors with exposure on the long side with a significant rally off the June 16th lows. The Nasdaq managed to notch gains of over 23% and the S&P 500 was not too far behind with gains of 17%. Merger arbitrage spreads that had widened significantly shrunk and 18 active deals closed in just the last four weeks. Beaten down tech stocks that had dropped anywhere from 60% to 95% from their peaks were the biggest beneficiaries of this rally. On June 15th, two days before this rally began, I wrote the following in our June 2022 Mid-Month Update discussing our bear market playbook, When adding technology stocks like Twilio (TWLO) and Doximity (DOCS) to our model portfolio, we had indicated that we were concerned about market volatility and want to build those positions over time. I think the time has come to start adding to positions. This bear market is far from over but it is impossible to pick the tops or bottoms of markets. The bear market playbook I have set up includes three sections. The first section consists of existing positions that look attractive and that I would like...

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