Coin Flip
Posted on Sunday, November 1st, 2020
We won!! As I told you last week we spent the weekend playing in our favorite golf tournament of the year. That is a Three – Peat if you are keeping track. (I am sure you are not). It was exhausting. The other bit of news is that our youngest was sent home from school. Not for anything he did but for the ‘Rona. His school had a minor outbreak and has shut down for two weeks. It seems like good old fashioned common sense. Much like a firebreak they are trying to stop the storm of Covid before it takes control. It seems like a smart move. In two years we will wonder what the fuss was all about. This flu will become part of the normal flu season and I expect things to get back to normal in the summer of 2022. It seems like a long way away but we will certainly be grateful when it’s all behind us.
I am so excited for Tuesday night. My son is into history and politics and has promised he will stay up late with me to watch. It will be fun sharing it with him. I still see Trump winning in a close one. The candidates were campaigning in Minnesota, Maine and Nebraska last week. Minnesota hasn’t voted Republican since 1972 when it went for Nixon. Nixon was the “law and order” candidate that year. The republicans must think it is vulnerable given the riots in that state in 2020. It only has 10 electoral votes. Maine and Nebraska are the only states that use the Congressional Districting Method for electoral votes. All of the other states are winner take all. These are three states to watch beside the obvious swing states like Florida and Pennsylvania. The fact that the candidates are spending time in Maine and Nebraska tells me that both candidates’ think that this is going to be close and could come down to one electoral vote! Don’t even get me started talking about faithless electors.
One data point that we brought up last week in Trump’s favor was the fact that the market was up in the period 3 months prior to the election. That check mark in his favor is now gone. The market is now down slightly over the last three months. The sell off last week took care of that. The selloff in the market was very orderly. It seemed to me to be more of a lack of buyers rather than massive selling. Our options guys had it spot on and the option market makers are more inclined to let markets fall at this time given their current positions. That can change quickly but for right now the market is on its back foot and the bears have the ball. No one has really wanted to get out in front of this selloff given the election is on Tuesday. There is no telling right now how it is going to go. It looks like a coin flip. We expect some political and legal wrangling before this is all over but it will be over by Christmas. We hope to take advantage of the chaos that might ensue.
Our golf weekend was exhausting -much like this past week in the market. Bitcoin was the big winner this week. Bonds were down. Gold was down. Stocks were down. Bitcoin was up over 6.5%! Our thought is that we are stuck in a range for stock prices. That is still intact as we approach the bottom end of our suspected range. The S&P closed at 3270. The bottom end of our range is 3140. Gold is holding its levels and that has us sticking to our positions. We could see a melt up in prices if there is not a contested election as the street has tipped its hand and has bought protection against volatility and a contested election lasting until mid December.
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.