Wednesday, March 11, 2020

Quick Note On The Latest

As I type the Dow's down ~1,000 points, S&P 500 is off  3.7% and the Nasdaq's down 3.3%. This comes after a huge promise-of-stimulus-induced rally yesterday.

What yesterday's action suggests, and signals to the powers-that-be, is that traders are yet willing to buy the promise of government action in the face of severely waning fundamentals. 

Don't be surprised if such promises, and actions themselves, induce more snap-back rallies -- like yesterday -- in the days/weeks to come.

I frankly can't think of a more dangerous setup for the individual trader/investor who opened his/her first brokerage account within the past 11 years, and/or, those who've allowed the experience of living through the longest bull market ever to lull them into complacency.

Like I said the other day, I'm not comfortable with the current this-too-shall-pass Wall Street/Main Street narrative. I mean, of course it will ultimately pass, but such a narrative inspires unsuspecting folks to treat this like any other buyable correction; and while it may very well be, underlying conditions presently suggest otherwise. 

I.e., While of course no one (least of all yours truly) knows the future (always multiple potential outcomes) the fundamentals themselves, in my view, have this market trading to notably lower levels before achieving the necessary clearing of the excesses, particularly in the credit markets. Whether we're talking this year, or next, I anticipate that it'll occur within the relatively near future (which encompasses next year), it virtually has to at this point...

After being slightly down yesterday, while the market rallied hard, our fully-allocated core portfolio is off 0.98% (on the morning) as I type this morning, vs the above for the broader market. 

The stuff working today is the stuff that held back the portfolio yesterday:

Here are this morning's top-performing positions, and their % moves (on the morning so far):

SP 500 Put: +29.5%
SJB (inverse junk bonds) +2.1%
FXY (yen) +.98%
GLD (gold) +.70%
FXE (euro) +.07%
FXB (pound) +.26%

The day is very young and the market is very volatile... Could see huge moves from here in either direction before the close...

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