Stock Analyst Channels Ernest Hemingway With 6-Word Market Stories To Summarize Q1

Legendary American author Ernest Hemingway famously challenged himself to write a complete story in just six words, coming up with "For sale, baby shoes, never worn." On Monday, DataTrek Research co-founder Nicholas Colas made his own list of Hemingway-inspired six-word stories to tell the tale of a strong but volatile first quarter of 2023 for the SPDR S&P 500 ETF Trust SPY.

Here are some of Colas' six-word Q1 tales that we liked the best.

"Stressed banks do the Fed’s job."
After a year of raising rates, Colas said the U.S. banking crisis in March may have helped tighten lending standards enough to bring down inflation and allow the Fed to pause its monetary policy tightening.

"Tech teaches recency bias. Market flunks."
Tech stocks tumbled into the end of the year in 2022, but Colas said late-year tax loss selling set big tech stocks up for a big first quarter in 2023.

Related Link: Market Now Expects Fed Interest Rate Cuts In The Second Half Of 2023, But That Could Be Bad News For Stocks

"Companies miss earnings; no one surprised."
Colas said most market experts understood that analyst earnings estimates for 2023 were too high heading into the year, but the key to market upside will be whether or not current earnings estimates will hold up over the next several quarters.

"Sell in May and go away."
This six-word story is an old Wall Street adage, but Colas said it may be sage advice in 2023 given the market's hot start to the year and the lingering uncertainty surrounding inflation, interest rates and corporate earnings.

"Bull run, bear market, repeat cycle."
This story was what ChatGPT came up with when Colas asked it to write a six-word story about the stock market. After a big first quarter of returns, it is still wise to keep some perspective on the long-term cyclicality of both the economy and the stock market.

Related Link: Fed's Preferred Inflation Measure Comes In Cooler Than Expected As Banking Crisis Complicates Powell's Plan

Photos: Hemingway, Writing "For Whom the Bell Tolls," at the Sun Valley Lodge, Idaho, late 1939, by Lloyd R. Arnold, courtesy Library of Congress.