Get a Dog
Posted on Sunday, March 7th, 2021
Diane asked me to look at some houses this week to go on vacation in Hilton Head. We know we are a little late. All the talk around town is about how booked all of the vacation spots are. There is just no supply left. Everyone wants to get out of town and travel again. Everything has been picked over. And the prices!! Oh my! I think maybe we will just stay home. Maybe we should book a vacation now – for after Christmas.
It was like a Rip Van Winkle market this week. If you went to sleep it looks like nothing happened but if you lived through it you have stories to tell. In the midst of all its gyrations the S&P 500 managed to finish in the black for the week. If you are long a lot of tech stocks (which we aren’t) it was a much different and much more painful week.
Reilly’s Rule #1– Never be forced to do something. Another Reilly Rule that we learned in 15 years on the street is if you want a friend on Wall Street – get a dog. The drama behind the scenes that you probably don’t know about is there is a very large investor long Tesla and other high flying tech stocks. The street may be trying to make her pay. Long story short – the street smells blood and they know her positions. They are driving them lower so she is forced to sell. Cathie Wood and ARK have held up so far but there is a long road ahead for her. This seesaw battle is playing out in real time. This battle isn’t over and it favors value and inflation stocks over tech. There are no friends on Wall Street and Cathie will eventually be forced to sell.
Market is due for some consolidation and this might be a good spot for it. The rotation from tech to value has the market churning in place. The market got what it was looking for in the way of the imminent passing of the next $2 trillion in stimulus. The market will start begging for more money once this is passed. Good news will also start to become bad news for the market as good news means less stimulus.
We have been expecting an 8-10% drawdown. We have that now in the NASDAQ. At the lows the S&P 500 was down 5.7% from its recent highs. The market has been rotating out of tech and into inflationary stocks like Exxon. In the last month NASDAQ is down 6.6% while the XLE, an ETF of oil stocks, is up 25%!! We are probably due for some reversal of that trade which would see a rebound in tech and a pull back in oil stocks. Keep an eye on Tesla.
In its brief 232 years of existence … there has been no incubator for unleashing human potential like America,”…“Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.” – Warren Buffet Annual Letter 2021
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.