Why Did Stocks Just Fall 5%? | New Harbor Financial

The market is undergoing a "phase change"

Stocks sold off sharply since hitting all time highs just 3 weeks ago (though a bounce is now in process)

Bond prices fell, too.

What's going on here?

Was this just a needed pullback to remove excessive froth before the market resumes rising to all-time highs?

Or is this a more significant reversal?

For a professional's perspective, we turn to John Llodra and Mike Preston, the lead partners at advisory firm New Harbor Financial. Many of you already know that New Harbor is one of the financial advisory firms endorsed by Thoughtful Money.

While they think prices may rise again from here, they think things will be a lot more volatile going forward — with risks weighted to the downside — given a “phase change” the market must go through to adjust for ‘higher for longer’ inflation and interest rates.

To hear how they plan to manage capital in the coming environment, click here or on the image below:

---

I’m so grateful to everyone who has kindly supported me by becoming a premium subscriber to this new Substack. It’s making an important difference in helping me afford the substantial startup costs of running Thoughtful Money.

Premium supporters receive my “Adam’s Notes” summaries to the interviews I do, plus periodic advance-viewing and exclusive content not made available to the public. My Adam’s Notes for this discussion with John and Mike are available to them below.

If you, too, would like to become a premium subscriber to this Substack (it’s only $15/mo, less than $0.50/day), then sign up now below.

---

Adam’s Notes: New Harbor Financial (recorded 4.22.24)

Executive Summary:

• John assesses the current market pullback as a short-term correction rather than the start of a bigger reversal, as broader market deterioration indicators have not (yet) signaled a significant downturn

• That said, New Harbor has trimmed their positions and increased their hedges, (such as out-of-the-money put options on the S&P 500), which act as a safety net in case the market does drop more than they expect from here. They’ve systematically been