"A Triumph of Hope Over Reality" (video)

Dear clients, here's a quick & easy one, but a very important one, to take in -- start to finish.

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Q3 Market Prospects, Have We Seen the Peak?, Concerning Analogs, Irresponsibly Bullish?, Nvidia, and Acceleration or Head Fake?

Dear clients, here are another set of comments we'd like all of you to take in, start to finish.

The following are key highlights from our latest internal log entries (with our latest [important] video commentary at the bottom):


After whatever correction the next few days or weeks delivers (if any), I expect the data to weaken as we move further into Q3, with stocks possibly rallying on the prospects for a September Fed rate cut... 

However, by the time we hit Q4 and/or Q1+ next year, the reality of recession likely sinks in, and -- while anything's possible -- we likely get our last leg down... I like that we're hedged to year-end.

Of course seasonality has to be mentioned, as a Q3 rally would be bucking the long-term worse-quarter-of-the-year trend.

Hussman sees potential for classic bubble-bursting bear market results:

I mentioned in our last video commentary the degree to which John Hussman sees stocks declining (to reach reasonable value) from present levels… While, as I explain in the video, that, in terms of magnitude, is not our base case, per the below it’s a view that demands our respect, and our attention. 

And, perhaps a touch contrary to my own short-term view mentioned above, he thinks we may have already seen, or are very close to seeing, the cycle peak in stock prices.

Here's from his latest public commentary:

Musing a Bit on Breadth, on History, on Recessions, on Valuations, and on When Buffett Was Considered a Buffoon (video)

Dear ALL Clients, this is for sure the one to watch, start to finish! Thanks so much for obliging, Marty 😎

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Key Highlights

Dear Clients, despite the Nasdaq sitting at, and the S&P 500 near, all time highs, this week's highlights from our internal log will not inspire confidence in the go-forward setup for stocks... Which, by the way, in no way means that the next bear market is imminent... It simply means that the risk is historically high right here, and that liquidity, diversification, and, in our view, hedging here and there with options is these days more than warranted.

In our candid view, prudent long-term investing is all about knowing when, and when not, to add risk... Suffice to say that today's overall setup is not the sort that you find at the early stages of a sustainable equity bull market... One could argue quite the opposite, in fact.

Charts of the Day: "Abysmal Breadth"

Dear clients, if you're wondering what keeps us cautious on equities right here, among other things, the following is, let's say, compelling.

From this morning's log entry:

A Head Scratcher Jobs Report, Mixed Signals Galore, and a Quick Look at Key Markets (video)

Note, in this week’s video I mentioned gold’s Friday decline and suggested that it was likely a reaction to the May employment report… And while the notable selloff in treasuries perhaps lends credence to that view, I had missed the fact that China’s central bank announced last night that it did not add gold to its reserves in May… Not doubt that was a not-small contributor to Friday’s action.

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Out Next Week, A Timely Quote and Some Key Highlights

Dear Clients, there'll be no written post next week, as I'll be on my annual Montana excursion, which once again has me offering up the link to an old blogpost that I believe has our all time highest hit rate.

Ironically, it has nothing to do with markets, so only take it in if you're in the mood for something touchy-feely.  

Here's the link to the 2020 version (disregard the days off mentioned, this time it's Tuesday - Saturday):  

http://blog.pwa.net/2020/09/gods-greatest-work.html

Now before we get to the highlights I wanted to share what I believe may ultimately turn out to be a timely quote.

At the end of Larry Montgomery's latest book, How to Listen When Markets Speak, he offered up the following message, which to a not-small degree concurs with our longer-term go-forward view: