Trillions
Posted on Sunday, August 9th, 2020
We took our eldest back to school yesterday. That was a lot of work. I struggle with letting her make her own decisions and letting her make her own mistakes because somehow her mistakes end up becoming my mistakes. I really should have paid for the movers. I must confess. It was time well spent. My wife and I secretly enjoy the work and the time we spend with her making sure that her room was everything she wanted it to be. It is going to be her home for the next two years. I, for one, cannot wait for Thanksgiving. I hope there will be college football but things are starting to look dicey. Anyway – Go Dawgs!!
The pandemic seems to have completely morphed from a health crisis to a political one. It just seems to me that nature is winning. Our society just isn’t yet able to grasp the science behind a new and complex virus and adapt fast enough to the changing conditions. Perhaps in the future we will have the wherewithal but for now it appears that herd immunity is the path so back to school we go.
We speculated last week that perhaps Congress’ inability to get a stimulus bill would spill over into markets as we approach the all time high. Markets headed ever higher as investors refused to believe that Congress would pass up a gold plated chance to spend with reckless abandon in an election year. In their incompetency Congress even found a way to screw that up. They found a way to fail to give away TRILLIONS of dollars. It is trillions. You can’t find some form of compromise? Markets got what they were looking for anyway as Trump signed executive orders this weekend for more fiscal stimulus. Now, markets can have their executive orders and perhaps a stimulus deal too. Democrats are stuck and need to come back to the table as they do not want to be the ones who denied Americans cash back 90 days before a Presidential election. Around and around we go.
Overvalued markets don’t turn down on their own. Something usually triggers them. – – John Mauldin
We find ourselves still looking for that trigger. The chart gurus have been spot on as momentum keeps stocks chugging higher to all time highs. The S&P 500 was up another 2.5% last week. Their target is 3500 on the S&P. We closed at 3351. That is only another 4% from here. Small caps and transports led the way on the week. That could be a sign of leadership change. Markets have come a long way and we could see a rotation in leadership from tech stocks to small cap and value. Market averages could just tread water here so we may have to venture to other holdings rather than just the averages. Gold has been a big winner so far in 2020 and we are very happy with our portfolio returns considering the volatility in 2020. Our gold holdings are up 35% year to date while our S&P holdings are up 5%. That’s a big help on the returns. We sold a bit of our gold holdings last week. Things have run very far very fast and we are due for a pullback. The long term environment for precious metals hasn’t changed but we expect to give back some of those gains and consolidate at these levels. Lots of talk of currencies and the US Dollar and that is moving markets. The Dollar has sunk of late and it seems as everyone is bearish on the Dollar. When everyone thinks something is going to happen – something else does. A rise in the Dollar would hurt precious metal prices.
Stay safe.
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.