Posted on Monday, November 30th, 2020
Sorry for the late note. We had some technical issues with a Microsoft update yesterday that took some time to resolve. All is well now. Our Thanksgiving was very nice, enjoyable, but it wasn’t the same. We missed having family at the table and all of the expectations and excitement that brings. As a bonus, I did get to see my dad last week which is the first time that I have seen him in a year. He looks great. We played golf and he is getting closer and closer to shooting his age which, for you non-golfers out there, is quite the accomplishment. 84 and counting.
We have been talking about bitcoin a lot of late and it had a hell of a week along with several other retail story driven stocks such as Tesla, Palantir (which was up 300% from its IPO last month) and Fuel Cell to name a few. It looks like the quarantine along with a shortened holiday week had the day traders back at it in the options market driving prices higher in a week devoid of liquidity. Tesla’s move this week now makes it worth more than Berkshire Hathaway – Warren Buffett’s conglomerate. That somehow is hard to compute for my value investing DNA. Berkshire had more than 10 times the revenue that Tesla had in 2019 and yet Tesla is somehow valued higher? It all feels very 1999 to me but that went on longer and higher than most figured it could.
CNN Fear and Greed Index hit 92 on a scale of 1-100. That is in the Extreme Greed category. That feels about right. It doesn’t mean that the market has to go down it just means that things are a bit stretched in the shorter term and the bulls are due for a rest. The holiday and the strong seasonal period are helping things along as it seems everyone is leveraged, long and happy to see higher prices. We see a selloff coming but one of marginal losses. The market is not set up for a sustained fall at this time. Perhaps things change after the first of the year but for the moment it appears that the market is building a solid base. We know that valuations are such that we are in the highest quartile. That tells us that we should expect lower returns and with more frequent sharp selloffs but the setup is just not there for a larger than normal selloff at this moment. It doesn’t mean that one isn’t around the corner it just that we don’t see one at this time. There is still too much stimulus being added to the system. For now we stay long and look to add on pullbacks.
Hope you enjoyed your Thanksgiving! On to Merry Christmas!!
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.