Alright, after a somewhat choppy March 2021 which I expected, the market ended the quarter on a high and the bubble begins. With Sleepy Joe Biden doing everything he can to force inflation and deflate the dollar…stimulus after stimulus after forgiving student debt after $2T Infrastructure plan…all just to make our products more appealing to emerging countries with larger population bases. Get ready America, inflation is real and everywhere I look…at the Gas Station, Toilet Paper, Hair Cuts, even the burrito I’m eating right now. Now is not the time to be long on the $USD. It’s all about future growth now and these large Corporations don’t see it in the US. Pump up the economy, reduce unemployment…only to set America up for the biggest crash ever. Enjoy it while it lasts. It won’t happen immediately, we still have a pandemic to get past which is still showing signs of one last final wave.
I wish I had a crystal ball, I really do. Because mine currently says it’ll be a choppy summer as Corporate reporting begins this month for Q1 and if I’m right, I’d expect a lot of Corporate earnings to indicate year over year revenue growth with a common caveat…increases in selling prices brought on by increases in core prices…INFLATION. Expect it to be a dominant theme over the next few months with the markets pulling and pushing as yields creep higher and Long-Term US bonds falling in value. That, combined with the big bankers and the rest of the economy taking a break and traveling for maybe the first time in over a year…There’s not a lot to get excited about right now as the markets look full to me. Low volume usually leads to short-selling in the near-term.
At least the SPAC craze appears to be taking a breather as well, but if inflation is real, I’d expect some desperation in some of these recently launched SPACs as we approach the end of next year. Increases in bond yields will put pressure on those remaining SPACs to find a company to take public, with maybe a SPAC rotation following the current rotation in the general public markets away from high growth/technology companies and into cyclicals or Company’s with proven revenue growth and profitability. Instead of sitting on cash which is earning essentially no return (ala Bill Ackman right now), if the markets do end up inflating later this year (hint, a X-mas rally seems all but certain coming off this pandemic), Mr. Ackman and SPAC Co will feel the pressure to buy into these markets again or return money to investors at no return over 2 years. Plus, if I’m not mistaken these empty SPACS flying around right now invest in low yielding government debt until they find a target, which may result in actual negative returns over 2 years when finally liquidated…not a good thing for those who invested in SPACs being launched today. So while this SPAC market takes a much needed breather, I’d expect a final round of SPAC activity later next year…call it panic buying. But who knows for certain, right? We still have a pandemic to get over.
Alas, here’s my speculative top-5 for April, knowing there appears to be more downside risk to the market in the near-term followed by a gigantic upswing once people wake up and realize asset prices are rising everywhere…
Cash (Seems silly, right? I’m betting against the dollar but also remaining in cash. I’d just be saving here to hopefully buy in at a lower price later this summer. Plus saving cash provides you with more buying power should you find something you really like in or outside the public markets and you never, ever bet the farm on anything…$30-$50K again).
Real Estate – Based on the increases in yields and real estate prices this year, 2021 may be the last time to buy at somewhat of a discount long-term.
For those with long term time horizons…it’s risky but you might as well pick up the big 3 technology leveraged funds with technology being beaten down recently and after their recent split making them more affordable…TECL, SOXL and FNGU. All should benefit from a hopeful Christmas rally this year if we can just get past this stupid pandemic.
TMV and TYO – See above discussion on yields regarding long-term Treasury Bonds, just don’t expect much in the short-term until inflation really sets in.
Still like airline equities here (DAL and UAL are my personal favorites). All are potential M&A targets at the very least once the pandemic ends. As an aside, once/if the pandemic ever ends, expect the M&A markets to take off as Company’s still reeling from the pandemic synergize and combine together to create a better more “ESG” friendly Company.
High Risk/Low Reward – I really hate typing this but I can’t ignore the hype. Crypto – I won’t touch it, my brokerage firm won’t touch it and I think this could pose some systemic risk to the entire economy if/when this bubble ever bursts. But if it has replaced Gold temporarily as the predominant inflation hedge, I could see BTC going to $75K, easily. Just too risky, even for me.
Good luck and stay safe, hopefully a return to normalcy happens sometime in 2021…
Alright, looking at the markets, it’s tough to get too excited about much right now. The Add-on stimulus should pass this month giving the markets a bump. Covid should continue to relent, giving the markets stability and if this were any other year, I’d say sell in May and go away. But since a lot of people may not have the ability to sell and obtain long-term gain status, I’ll just throw some speculative stuff out there. Remember to always keep an emergency fund, but I think inflation has to set in at some point. Gold would be the go-go play in the past but unfortunately, until BTC goes away, gold’s gains look capped…
TYM – If you can’t benefit off a foreseeable increase in inflation off a direct investments in gold, it’s best to attack the dollar directly. How? Through government debt. The theory is that if yields keep rising the actual value of our debt declines. This ETF is set to track the inverse of 20 year bond funds 3x.
TYO – The value play to TYM
Any other outdoor/vacation plays should be worth watching as well.
Another interesting month in the markets. The Trump factor was real but had little impact on the markets when the attempted “Storm the Capitol” strategy failed. With Biden now entrenched in office and Georgia going blue, it paves the way for the add-on stimulus. However, another unknown has presented itself in the form of the WallStreetBets forum on reddit. While they appear to be targeting hedge funds exclusively, the impacts on the markets, while transitory at best, could cause some wild volatility in February. My guess is the add-on stimulus doesn’t get passed until March which should create excellent buying opportunities in February as long as the long-term bull trend holds and we don’t go completely backwards again on COVID-19. I’d continue to hold onto any of the mines previously posted in the top 5 stock picks, especially if the WallStreetBet guys try to target commodities next. But to survive the fluctuations in February, I’d continue to play it safe for now…
Cash (Reducing this to $30K as most of readers hopefully took my advice and bought back into any holdings I viewed as risky – I apologize for any tax consequences this strategy may have caused, just overestimated the Trump Factor at the time).
Real Estate – Interest rates aren’t going anywhere anytime soon
Marijuana Stocks – Still cheap and after the stimulus, I could see Congress turning their attention to reform of marijuana laws at a federal level
JPM – Safer than hedge funds right now
High Risk/High Reward – Short term puts on anything these WallStreetBets are pumping like GME
Continue to hold anything I’ve listed in the past 5 months or so, not named QS, JNUG, NUGT or UGL.
Bookkeeping and Your Small Business: Critical Links and
by Jim McKinley – moneywithjim.org
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Alright everyone, the Trump factor is very real, as evidenced by his latest pocket veto attempt on the less than $1 trillion Stimulus that Congress was able to pass. That combined with the uncertainty of the Georgia elections and a belief that Corporate earnings will disappoint when compared to the calendar Q4 of last year, amongst other things has enough to spook me this month. Plus, by selling on either January 4th or January 5th, you push your tax gains out until 2022. At best, I say the markets trade sideways until at least the first 30 days into Biden’s first 100 days of office. Meaning, now’s a good time to take some profits, build some cash or just reallocate your portfolio. In any case, it’s time to get defensive here. All this could change with Georgia going blue, no martial-type law before the Biden inauguration, and Trump just walking out of office at the end of his term…yeah, I just don’t see it happening. So while I invest for the long-term, there is some day trading I’m going to try and do in January and hope for a pullback. Why January? If you’ve been on a run such as I have for the last 6 months (I’m up like over 350% last I checked) and I’m good at calling bottoms but somewhat questionable, as shown during the start of the Covid pandemic about calling tops, this just has all the signs of a pullback to me. Either way you’ll be ok long-term, I just think the short-term sucks. So here’s my top 5 for what I think could be a very volatile January 2021:
Cash (like bump it up again to $30K – $80K, but be ready to trade back in when the markets stabilize come February)
Real Estate – Residential or Commercial still
Equities (still love certain industries here – mostly alternative, guns and ammo, innovative Companies outside the US and of course actual gold miners making profits)
ETF’s – Be very careful here and expect a slight pullback so I will probably sell early January and wait to see what happens until Biden is inaugurated, but long-term you should be fine:
I’m on the fence about these ETF’s and will probably sell early January as they’re highly leveraged and even sideways trading will lead to decay, but long-term potential gains has me watching them very close right now (expect a significant bump once the Biden add-on stimulus passes):
I definitely dump these ETF’s:
Good luck everyone…remember – 2021 has to be better than 2020, right?