DOW 23,000+ today?

[Fat Boss]

I had sold everything I could and put the $$$ in stable value funds last Aug to hedge against election turmoil. I got luckier than a king's dog when the market bit the dust a few months ago, and have made good money by buying back in. I'm thinking about doing the exact same thing I did last Aug.

Any thoughts on what the market will do ahead of the election? My guess is the market will like a Trump win, and dislike a Biden win. But, to what extent?

 

[302BOB]

I don't see Trump getting re-elected unless the Russians have more absentee ballot votes than the Americans have....A Biden presidency might be good for our future...only time will tell........Hang on to your hats either way!!!!!!!!!!!!!...the one thing I don't want to see is covid affecting the election..............

 

[Ludachris]

Before we start getting into the election predictions and who would be best for the nation... let's try and keep this focused on the market.

I'm curious to see how the market reacts too. So much posturing and propaganda out there, and a lot of it geared towards influencing the market. A lot of money at stake.

 

[302BOB]

So true, But the market is very volatile at any time for any reason......no risk...no loss has been my trademark for a while.......................no risk..no gain can get you in trouble, quick..............

 

[TymeSlayer]

I'm betting on continued chaos for now but it's like throwing dice, even if they're in your own hands you don't know what numbers come up.

 

[302BOB]

Our Indian casinos opened up Monday and they make sure the dice are cleaned after each throw...I hope the numbers don't wear off...................

 

[Ludachris]

Our Indian casinos opened up Monday and they make sure the dice are cleaned after each throw...I hope the numbers don't wear off...................

I really do enjoy your humor in here Bob.

 

[VoodooBoss]

Any thoughts on what the market will do ahead of the election? My guess is the market will like a Trump win, and dislike a Biden win. But, to what extent?

Your assessment is consensus thinking and I agree. I’ve been discussing this with a friend and I think the real question is when to take some profits and move to cash:

In regards to the 2020 election I think anything prior to Labor Day will be too soon. Maybe early Oct will be the right time but you’ll want to follow the polls closely on this for guidance.

Regarding the overall market I’m not worrying about a 10% or more pullback when it happens. The economy seems to be reopening orderly and predictable although not robust. Any unexpected negative news will not be good. The virus will probably comeback strongly about the time of the election or sooner but the level of the return will be key to the markets and the election.

I’m currently the most aggressively and fully invested I’ve been since before the financial crisis. Fortunately I was sitting on a lot of cash prior to the virus and moved to fully invested a few days after Ed Yardeni called the bottom. (See my previous post about Ed). As my old hedge fund boss liked to say “better lucky than smart”.

My favorite quote from Warren Buffet always applies at market extremes:

“Be fearful when others are greedy and greedy when others are fearful”

 

[Bill Pemberton]

Have to agree with The Slayer, viewing the Market on a " Historic Perspective," since we have alot of new variables that have been dormant for awhile and emotion has a bigger impact ( imho ) than the past couple of decades. Economic downturns, increased Nationalism away from a stable World Market, Pandemic, unemployment, riots, oil glut, etc. , all factor in , and not saying we are not frequently under some of these conditions, but it seems rarely in my lifetime do I remember so many of these areas ping ponging around daily? We have to stop and pause, though, because the advent of the Internet's instant info explosion , does mean keeping on your toes is a minute to minute exercise.

Part of the reason I am looking for some areas many of you peruse to build additional data , as well as venues , Market Analysts, Newsletters, and more , for staying on top of these warp drive markets. So far some good areas to look into and much appreciated the suggestions.

 

[VoodooBoss]

I'm betting on continued chaos for now but it's like throwing dice, even if they're in your own hands you don't know what numbers come up.

Volatility presents opportunities. Right @Grant 302 ? The key is to have some dry powder to take advantage of those opportunities.

 

[Bill Pemberton]

Agree, but am sitting pretty cash flush right now, as will be moving my 401K around in the very near future. Once I have more control with alot more choices, going to get into some choices I have had on a small scale for awhile.
Like the analogy for October/ November and the election, because regardless of party that is always a significant watch party.

 

[Grant 302]

My view is that we still need a phase of massive inflation and devaluing of the USD followed by major foreign currencies. Increases in the broader markets are part of my macro inflation model.

FWIW, I think this is still in effect. The order of the currency devaluations is flip flopped due to Covid being a global issue. USD is a hedge for many parts of the world in troubled times.

I still mostly ignore the news. For the most part, I just check the headlines. Been that way for at least the last couple of years.

As for the price action in the last few days...as I alluded to in my last post, a break-out from the ~25k level is in progress.

Price action facts:
Feb. low levels have been breached/exceeded for the DJIA.
March highs for the S&P are being tested right now.
VIX has been contracting during this move up, including days like today.

I think the next action is to continue the breakout to about 28-28.5k on the Dow. Barring any injection of significant bad news, I think it get there this summer, pending any election related issues.

 

[VoodooBoss]

The inflation concern is well documented but it won’t raise its ugly head for 2-3 years at the earliest. In the meantime look for continued asset appreciation.

I also think we may move to the 28,000+ mark on the DOW and if we haven’t have a 10% pullback before then that might be a good time to take some profits and start building some cash.

 

[Grant 302]

Volatility presents opportunities. Right @Grant 302 ? The key is to have some dry powder to take advantage of those opportunities.

Agreed, but volatility like this also presents challenges. Unusually high volatility is an added expense to my typical hedging style.

So while there was a huge, unpredicted windfall from the move down, I’m not making money as efficiently on the way up. Not that it’s a problem...gains for anything I do for the rest of the year pays pennies on the dollar since the loss harvesting is way past exhausted.

 

[Grant 302]

The inflation concern is well documented but it won’t raise its ugly head for 2-3 years at the earliest. In the meantime look for continued asset appreciation.

I also think we may move to the 28,000+ mark on the DOW and if we haven’t have a 10% pullback before then that might be a good time to take some profits and start building some cash.

Agreed that inflation doesn’t happen overnight. Even 2-3 years would be soon IMO.

I’d welcome a 10% drop, just doubt it’s in the cards right now.

I’m fairly cash heavy right now, but wouldn’t make that recommendation at the moment. I think it’s still time to let it work or miss the opportunity in front of us.

 

[Bill Pemberton]

Thanks for the thoughts Grant , similar to a few of my feelings , but more detailed and insightful.

 

[Fat Boss]

Thanks guys. My only remaining question is how long to stay waaaaay overweighted in LRCX. Lam has been gaining market share pretty regularly in the semiconductor capital equipment market for the past several years, and with our new offerings I think that'll continue for at least a couple more years. But, I'm waaaaaay overweighted right now haha.

 

[302BOB]

But, I'm waaaaaay overweighted right now haha.

That's a big concern among a lot of us here...market or no market.....................My Boss is lean and mean, but the owner/driver, not so much in more ways than one...

 

[1995CobraR]

I like the trading that got the market up today. I'd say it is a short squeeze when shorts have to cover..

I am not chasing this market higher. We will get better prices in the fall months.We have been flooded with stimulus which goes cold soon.

 

[Grant 302]

Thanks guys. My only remaining question is how long to stay waaaaay overweighted in LRCX. Lam has been gaining market share pretty regularly in the semiconductor capital equipment market for the past several years, and with our new offerings I think that'll continue for at least a couple more years. But, I'm waaaaaay overweighted right now haha.

You’re the one who’s supposed to tell US!

But based on what you’ve said, I’m not selling what I have.