Alright, since the COVID-19 Pandemic began, I’ve been saying I’m staying out of the markets until Labor Day Weekend. After sitting back and watching the parabolic rise in equity stock price with trailing fundamentals, I personally did not want to get trapped in a bubble. So here we sit at Labor Day weekend and not much has changed. While the economy is opening back up in most states (my home state of California included), interest rates are expected to remain at historic lows for many years to come, unemployment is dropping and we’re beginning to get a sense of who may win the election, we’re still looking at irreparable damage to the economy for quite some time. I may have indicated in previous posts that the aftermath of a hurricane is almost always worse than the storm. Now, with the news that option traders have been driving up large caps, particularly in the NASDAQ, I’ve determined that all signs point to a sell in September (potential crash in the markets). As the banks appear to still be well capitalized, all it takes is one large shock to change things and send the whole markets crashing down. As such, I’ve decided to put some of that extra cash I’ve accumulated since the pandemic started to work as it’s way easier to make money on an elevator falling, than what seems like a phony escalator increasing. Whether you question the seriousness of COVID-19 or not, we still don’t have any type of cure, we’re heading into flu season, Softbank has been accused of market manipulation in option trading and there’s still the potential Trump has something up his sleeve. So from now until December, I’m selectively going to short the market. Note, I do not expect a market crash, but I’m pretty sure this is the last leg of the bull market which began in April 2019. Something’s gotta give…on to the Top 5
Cash ($40K – $80K) – Don’t ever bet the farm
Real Estate – Even if the markets do crash, rates aren’t going anywhere and you’ll still make money on the spread paying down a mortgage faster when the real recovery sets in. Plus if history has taught us a lesson, when the dotcom bubble burst, investors tend to invest in things off-market, like housing
UVXY – This to me is the tell all indicator. As long as it’s above $25/share, easy money. If it starts accelerating up, push more money in
SQQQ/WEBS – Purely speculative, but I think the NASDAQ’s gotta give
SDOW – As I mentioned last month, the DOW looked like the weakest index. I think someone must have heard me as they rebalanced it last month to strengthen it a little, but I wouldn’t be surprised if it pulled back to 25,000. If it drops under 20,000, look out below…
Again, if the government steps in and gives more money to people out of work, I’m not sure how it helps the markets now as we’ve seen before that no one want to catch a falling knife. I could be absolutely wrong on all of this, but I don’t see how the current rally is sustainable at a time of the year when crashes usually occur.
Another month, another top-5. Pretty much same as the last one. Too much uncertainty out there right now with the elections, continuing pandemic and delayed government response, and now anti-trust fears about Big Tech and alleged spying by the Chinese government (TikTok). I mentioned I wouldn’t be making any moves until after Labor Day Weekend and nothing’s changed. I would expect a pullback by the markets at some point or very slow growth until the end of the year until all states (including California) fully reopen. Even then, we still need to deal with the aftermath, including possible extended periods of high unemployment, bankruptcies and negative GDP. You can day trade against the Robinhood kids but I’ve seen the markets pump fake too much the last month or so where it appears it’s headed in one direction and then levels out. So I’d still keep it easy until next month and focus on liquidity for when you are ready to make a move. If the markets tank they usually tank in Sept/Oct but it seems like the banks are stable enough right now to prevent a crash (and maybe the only thing I’d consider investing in right now (keep your eyes on JPM and C). BAC may be a play after the Buffet investment but the stock rarely moves and with the potential of increasing reserves, I’d stay away until Q3 earnings/estimates start rolling in. The Dow looks the weakest right now and if there is a short play, I’d move some cash against it. When they agree and announce the second stimulus package, I’d expect gold and precious metals to continue pushing upwards, however, realize the market is very fragile to any other unforeseen shock right now and if equities were to tank, gold may get dragged with it…Summed up, all this makes an easy, but boring top-5 again for August…
Cash – $35K – $60K
That being said I can’t keep telling any potential readers the same thing each month. I provided you some information to combat creditors a few months ago and if you live in California, this year (and future years) there will be a mandate to purchase health insurance at obscene prices and combined with a potential Biden election win, the return of Obamacare on a national level. But if you are struggling financially, I’ll drop you some more words of wisdom as to how you can avoid the CA penalty this year if you were laid off and unable to afford health insurance yourself…
First, you need to login to Covered California and begin the process of applying for a General Hardship Exemption…
By applying for and using COVID as the hardship, you will be given an exemption period from 2/1/20 – No End Date as the disaster is considered ongoing. This should also apply to next year’s federal taxes, should you itemize and have sustained any property or casualty losses. So keep records of anything you incurred due to the pandemic for write-off/deduction next year.
Alright, kind of got off topic last month, but I admit it, what’s to say? I’m going to do a preemptive Top 5 in July cause I will not be blogging on this July 4th weekend. Not much has changed in the market besides the valuations for some of these Companies just look too high right now. I think Trump just printed money, which the unemployed used the extra $600 and helped pump up the markets. Then these stories of these Robinhood traders, something’s not right. Only thing that looks cheap right now is semiconductors and homebuilding supplies. I’ve said it before, but with rates this low, I really like Real Estate. So, without any drunken ado this time, an easy Top-5 for July…
Cash – At least $30k – $50K (try to get this to $100k by the end of the year, I use Ally but to each their own)
Keep an eye on these 3xl funds (not to invest in right now), but if there are deals still left, they’ll be here and logic tells us they will probably lead us out of this (5G + More Real Estate Activity), but I’d still just wait until after Labor Day to even think of investing right now…we gotta get through this Pandemic thing first and the aftermath is usually worse than the catastrophe, so you’ve got some time…
Happy 4th of July everyone. There will be better times. Basketball is back July 30th…hell yeah.
Wow, what a fucked up month. Guess my prediction of Trump winning the election looks pretty foolish now. Biden just walks right into the white house unless Trump has an ace up his sleeve (Russia? China?). Seriously, hope everyone has survived COVID-19 and these ugly riots.
I just hope they convict this pig or it’s Rodney King all over again times 10. And his buddy’s should go to jail too for just standing by and watching (am I too old that my audience of one has never seen “A Few Good Men”)? If you’re a pig you have a moral responsibility to to fight for those who can’t fight for themselves, even when your own officer is killing them.
Anyways, you’ve heard enough about this crap, so let’s digress and talk about something people can use. With stocks ridiculously priced and with the economy shut down for pretty much 3 months now, I expect prices to get real expensive here. And with interest rates being so low, I think real estate is the play right now, if you can afford it. Commercial or residential, inflation’s coming. And for those who are carrying a large amount of unsecured debt because of this crisis, instead of a top-5 which is all cash (and will continue to be all cash until at least Labor Day), lets do a top 10 ways to walk away from unsecured debt instead (this is debt not secured by any collateral like a house or a car or a student payment which is complete bullshit or of course the IRS, but instead by the one only secured by the full faith that you’ll pay it back). Sound familiar? Note I do not condone any criminal activity in anyway. I’ve just been watching too much Better Call Saul, so this information is for entertainment purposes only as we deal with 2 crises right now and only based on that show, this is what I’d do…
Go to an all cash method for paying “essential’ bills – Mortgage/Rent, Car if you’ve already financed it, Utilities, Internet, Cell phone, Food, Medication, Hygiene, etc). That way you can figure out an “essential” cash only monthly budget for the cost to survive.
If you have unsecured debt (i.e Credit Cards) and won’t ever be able to pay them off, or you’re just sick of having to pay $1,000 in credit card interest each month, find out the Statute or Limitations (“SOL”) in your state (for example, in California it’s 4 years).
Try to keep the amount you owe any creditor under $10K.
Determine morality – whether you’re willing to walk away from all the interest payments you’ll be making at 24% interest soon.
If willing to walk away, think of anything you may need to buy using the remaining credit you still have during the SOL from today’s date (i.e. new bed, new phone, new computer, etc.).
If willing to walk away, keep one card alive for future car rentals/hotel reservations, plane tickets – anything that may require a rental card to reserve (Capital One Platinum’s a good one to consider, no annual fee and typically they’re the ones you don’t want to walk away from, sorry – they’ll take you to court for $400).
Go on a spending spree and max out your cards for the items you determine in #5.
Quit making interest payments and set your phone to do not disturb, but allow for calls/messages from your contacts only. Do not answer the a phone call received from any unrecognized number.
Watch your mail. You will get calls for 4-6 months at least from original creditors. Ignore them and anyone who doesn’t leave a message. After the calls stop, you will start seeing settlement offers in the mail. If the original credit, do nothing.
If it’s a debt collector who has bought your debt for 5 cents on the dollar, force them to validate the debt within 30 days of receiving notice from them in the mail. Ask to see a signed agreement showing where you agreed to pay the amounts they claim you owe. Vast majority won’t have anything as they pay so little for the debt that’s charged off by the original creditor after 6 months of non-payment for tax reasons.
This one’s free – your credit score’s just a number. This will stay on your record for 7 years but you can avoid bankruptcy if you can just wait out the storm for the SOL period from the first day you default on your first interest scheduled payment. You won’t be able to borrow any credit again for 7 years, but if you keep one card active for $1,000, you won’t need to. If you own a home and it’s in the money, you can still refinance, just at a slightly higher rate.
Seriously now, good luck to anyone who’s reading this blog. The world’s a messed up place right now but it will get better. Throughout human history we’ve watched society’s struggle for power. Those with vs those without. Think of the Romans, the Greeks, the Ottoman empire. Technology may change things but we will always have those that will protect their power at all costs and those struggling to gain more power. In the 1500’s those who controlled the church controlled society. Today, it’s those who control money. Think of what it may be like 500 years from now. At the end of the day, you’re money’s just a bunch of worthless paper or data. Unless we assign it a value, it has very little. Life is the only thing you can’t place a value on, and as we’ve learned this month, “All lives matter.”
All old lives matter. Wow, I’ve never before seen such overreaction to SARS v2.0. Lots of people got it. Few of them died (sorry if this strikes anyone as offensive and has actually lost someone due to the CV), but I don’t know of anyone who has gotten it or known of anyone who has gotten it. Either that or San Diego’s the place to be when a pandemic strikes out. Anyways, nothing changes for May 2020, best to wait for the deaths to stop, society to reopen and the election results become more clear. My money’s on Trump if I had to pick right now but I’m not going political and I’m not sure it even matters anyways.
The one thing this does expose is people’s power to save and hold enough cash to ride this out. Never bet the farm on anything. All you need if you’re single or mostly single is like a $30k emergency fund. Stick it in a savings account and don’t ever touch it until an event like this occurs again. Makes it way easier and you much more relaxed to do some things you can’t if you’re paycheck to paycheck.
I also like investing in real estate here, if you’ve saved the cash for a down payment. As the threat of death looms over people’s mind’s, 401K’s will lose some luster (who knows if you’ll make it to 65 – even then every dollar gets taxed of your gains once you start pulling money or right now if you do a Roth IRA). For real estate, the first $250k is tax-free…
So here it is, another boring top-5:
Sorry, there’s some upside in bank stocks but too many downside risks right now to invest in anything.
Wow, who would have known a bad flu multiplied by negative media press would cause such damage to the economy and markets. Like Warren Buffet, I guess I’ve seen it all. Due to these circumstances, I am changing my investment strategy. Save all your cash, wait for a panic and short-sell the panic. Way more easier to make money by letting sucker’s pump the market then waiting for a panic and shorting the market down. That being said, there are some values out there, but I wouldn’t expect any immediate returns as this whole mess gets sorted out. If it extends to the banks, watch out. Personally, I wouldn’t touch anything right now, bull or bear until mid-August to mid-October. Market’s too caught up with the press headlines. One day, the cased have subsided, one day unemployment is going to 20%, one day a new coronavirus has been discovered. Just stay away from buying anything right now…
Wow, I didn’t realize SARS v2.0 could do so much damage in the near-term. I was going to advise to sell in May and go away but it appears this virus beat me to it. This is equivalent to the shut-down last year. Expect a soft 2 quarters, some volatility as the election progresses and then a relief recovery. So if you’re long, stay long unless this virus starts killing people like TWD. There should be plenty of buying opportunities before the end of the year. That being said, uncertainty over how bad this is going to be cause me to suggest a conservative route in the near term. So the Top-5 is relatively easy until the markets bottom out (I’d expect somewhere around the Dow at 25K)…
Hope everyone had a safe and enjoyable New Year/End of the Decade. As we begrudgingly head back to our day jobs and the calendar year-end cleanup, I thought I’d drop a new Top 5 for January while I had some time…As I mentioned last month, I would not expect the same level of returns as last year’s profits, and with some potential uncertainty with Trump’s impeachment and the new election, I would predict a sell in May and go away year. Which makes earnings season plays the way to go in 2020 (along with commodities, particularly those tied to inflation – oil, gold, etc).
For a brief lesson on how to play earnings, in a month following the quarter-end (i.e. January) keep track of when Companies are slated to post earnings (usually after-market). In the final trading session before a Company releases earnings there’s usually a leak. Therefore, watch closely in the last hours of a trading session before the Company is required to report. Since my belief is we continue on in this bull cycle which started March 2009, any dips are considered buying opportunities. The big guys know this and once they receive validation of a leak will manipulate the Company’s share price based on whether they believe earnings have been met and prospects remain bright or there are signs of Company weakness.
Therefore, if a stock you’re tracking sets all-time highs an hour before it’s about to announce earnings, sell. It’s actually a sign of weakness as large institutional investors are pumping the stock one last time before having a reason to drop it significantly after-hours and in the next couple of trading sessions. Conversely, if the stock price of a Company you’re tracking drops before earnings are announced, it’s actually a sign of strength as the same large institutional investors will be pushing the stock price down in an effort to pop it after earnings are announced. Anyways, onto the Top 5 for the new decade…
Purely Speculative – GUSH, OILU
Worth paying attention to (I’ll admit I’m not a big fan of gold, but with interest rates this low you can’t ignore any signs of potential inflation around the bend ) – UGLD, JNUG
As we await the signing of Phase I of the Tariff relief bill in the next week or so, the market slowly continues its year-end melt-up. As stock’s hang near all-time highs, 2019 was a great year for value investors like myself. Looking at next year, I’d expect only modest growth in high performing or highly innovative stocks combined with muted growth from financials and other industrials/cyclicals. Onto the Top 5…
High Risk, High Reward – Really like Oil here at these levels for some reason – any of the leveraged ETF’s should pay off down the road if you have a longer time horizon – GUSH, USOU, OILU
Last year’s news (time to cash out, if you’re still in) – Any CBD stocks – GWPH, CVSI
If the value/timing is right (wait for a pullback) – TSLA (closer to 300), GOOG (closer to 1150), CMG (closer to 750), HD (closer to 200)
Have a great remaining holidays and I’ll see you next year.
I apologize guys for not including an October update, but not much has changed in the past few months. My prediction that August would be the ideal buying month appears to have come true as all markets are up significantly since then. I believe the bull cycle which began in 2009 is still currently in tact and expect a year-end melt-up. So all my stock picks from previous months remain a hold. But I’ll provide a new top-5 for those looking to diversify some…