TRUST and Markets

Well, it’s been a long time since I talked about the stock market. I don’t keep daily tabs on the global markets anymore. I used to do it religiously and knew just about everything that was going on.

I’m 100% sure that everybody is shocked is hell that the market is rip-roaring higher since Trump’s election. After all, EVERY single pundit said the economic demise of our planet, or universe, was assured if Trump wins.

This blog isn’t about Trump. I could care less about him or his presidency. But, I’m just reminding you all – once again – that what most people believe as “truth”, rarely is. Thinking for yourself – instead of letting others define it for you – is utterly rare these days. It’s rather pathetic.

EVERYBODY WAS WRONG ABOUT TRUMP AND HIS IMPACT ON JUST ABOUT EVERYTHING. AND THE PEOPLE WHO WERE MOST WRONG ABOUT EVERY PREDICTION CONTINUE TO STEAMROLL DOWN THAT SAME ROAD. IDIOTS.

I hope this makes you pause a bit before you fall for the same trap. And I surely hope that you will exercise more caution before taking the bait – hook, line and sinker. Trust no-one, especially the media, politicians, economists, global elites, “intellectuals”, corporations, and the wealthy.

Everybody has an agenda. And it usually doesn’t align with your best interest.

Stock Markets

Now, let’s get onto the global financial markets and stocks. Since the day Trump was elected president, the stock market has been roaring higher. (A reaction few expected. Because few can think beyond one chess move.) The dollar rapidly got stronger, and bond rates rose quickly.

None of this should have surprised anyone. It’s exactly what should have happened if you took Trump’s word on what he intended to do and assessed the economic impact. You can tell that the global financial community clearly thinks it’s positive. Myself, personally, I think it’s only short term positive.

Remember: Stocks won’t go to the moon in a straight line. And stocks can keep heading to the moon, seemingly indefinitely, longer than you can stay solvent. My point? Be careful in either direction. It’s not guided by fundamentals at this point. And it’s way ahead of itself.

My prediction is that after the inauguration, the markets will correct 5-10%, before resuming their ascent. Right now is the most bullish, because we only have the idea of a Trump presidency. And this can be interpreted any way possible, especially bullish, for a number of sectors. But when the words come flying, and the bills begin debating, and the media starts scrutinizing, and the negativity is upped about 100 degrees, well, reality is never as pretty as fantasy. So stocks will correct a bit once the rubber meets the road, and Trump is actually in the White House.

Some time ago, I made some recommendations and predictions about specific stocks.

Long-Short Hedged Market Position

I don’t track these daily anymore, as I indicated. But, I decided to spot check them today.

  • Macy’s (M) has gone down a lot. I hope you all heeded my advice to sell before Christmas. If you didn’t, well, too bad and too late. I said before that the stock would likely get to $45-$50 before Christmas. Well, it got to $45 exactly. If you listened, you locked in profits of 50% gain in 7 months ($30 buy, sell $45). Pretty damn good.
  • Twitter. Hold for now. It’s still well above my initial buy price.
  • SPY. You should exited any short positions that I recommended early on in the year. During summer I wrote the blog below. I said the SPY and markets generally were heading higher, so that should have been pretty clear for you to exit any short positions. We lost money on SPY, but only single digits. Not bad. Knowing when to exit positions is more critical than when we buy.

New Highs or Just High?

  • Sears (SHLD). Sell. I said sell it/short it back when it was above $14 in August. It’s trading around $9 now (36% gain in 4 months) and was near $8 in the past month. It’s still going to zero so get rid of it or short the hell out of it. Solid gains of 36% in 5 months is damn good.

Sears Will Be Bankrupt In Less Than 18 Months

  • MGT Capital (MGT) is under some type of SEC investigation and the stock is suspended from trading. I suspect this is some type of personal vendetta against McAfee that the Obama administration has. He’s proven himself to be quite petty like that with regards to setting scores. Trump will take it to a new level though. Hold for now (no choice). I said this stock was high risk. Basically, the stock is about even from where I originally recommended a buy. If you had sold before this point, you would have huge gains of well over 50%, but I never recommended exiting this stock before. Hopefully, it turns out ok.
  • Gold (GLD). Gold is getting pummeled. It’s down a lot and trades near $112 today, representing an 8% decline from the original $122 price. This is related to the Trump victory and strong dollar trade. As I’ve always said, just hold onto the gold for now. Periodically buy more at these lower prices. But hold for years. It will pay off huge.

All in all, the net performance is very good, well above 20% in less than 6 months, still outperforming Wall Street for the past year.

This year is going to be quite interesting. There’s a lot of fiscal policies coming from the Trump administration and the Republican congress. It should be overall bullish for stocks, especially given the major tax reforms that have been promised.

However, keep an eye on inflation. I have been warning that the precursor to inflation is showing warning signs in the past year. Wages skyrocketed in the past monthly employment report. Interest rates are rising, although still in the range band. If it breaks out of the multi-year band, be careful. If wages and inflation shows it to be breaking out of the multi-year range band, you should run for your life. Get out of the markets at that point, because 6-12 months after that point, there will be a collapse.

Good luck. This will likely be my final blog on the topics of finance and economics.