Smooth Ride
Posted on Sunday, October 11th, 2020
Reilly’s Rules – Fear is a useful emotion unless it rules you.
We got on a plane this week. We were invited to a very special golf course in New Jersey called Due Process Stables. It has a colorful history and is VERY private. In fact, it only has about 60 members. You could tell by the condition of the golf course that it doesn’t get the play of most and the golf course is all the better for it. As you probably know I am a golf nut. I feel that it is, quite simply, the greatest game ever invented. It greatness lies in that it serves as a metaphor for life teaching us about ourselves and playing companions. The invitation alone would usually be enough to get me scrambling to purchase a plane ticket but the pandemic had me a little hesitant. After considering all of my options I chose to put fear aside and get on a plane. I would be playing with some of my closest and dearest friends who I haven’t seen in over a year. It was well worth it and the folks at Delta Airlines did their very best to make it a smooth ride and as comfortable as possible. I found that while the plane and airport were only about 25-30% of capacity people were, in general, much nicer than usual in the hustle and bustle of air travel. It was a pleasant surprise. It was invigorating to see my friends and my only regret was not getting to see more friends, clients and mom. I needed to make some concessions to ‘Rona and make sure that everyone was kept safe. Don’t let fear rule you.
The summer for the market is usually a quiet time with little returns to show for it but this year was different. This year we saw the market elevate during what is seasonally a slow return period. We are now approaching the much more profitable November thru May period. Given the charge by the bulls in the slow summer period we would expect the winter period to be ruled by the bulls as well. The extreme in market valuations, pandemic conditions and bumpy election period may not be able to hold bulls back. We will be giving the market a hard look as to whether or not to increase risk in the coming weeks as we look to take advantage of a bumpy election and bumpy market all while trying to be mindful that we could be in a range bound market.
The bulls have taken back the ball over the last two weeks. While September was a mess October is off to a pleasant start. S&P 500 closed this week at 3477. The last time we sent out our weekly note we postulated that there would be support for the S&P 500 at the June highs of 3234. The market put in its most low 4 days later at 3209. Not bad for government work. We still think that a market sell off of 15% from its peak could put in a nice base for markets to rest for a time. That is on par with the Gore v Bush fiasco. That brings us to 3049. 3000 on the S&P 500, if reached, will act as strong support. We suspect that we could be 9 months into another 2 year consolidation range between 3140 and 3500. That would be very healthy for the market and would portend a move higher into the 4000 area on the S&P.
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.