I get so weak in the knees I can hardly speak.
I lose all control and something takes over me.
In a daze and it's so amazing, it's not a phase.
I want you to stay with me, by my side.
I swallow my pride, your love is so sweet.
It knocks me right off of my feet.
I can't explain why your loving makes me weak.
~ Artist: SWV Song: "Weak "
I was jamming to some classics and decided I needed the help of SWV to describe how I and many others feel about the economy, stocks, and life right now. Yes, only the classic hits of SWV and that soulful rhythm and blues (R+B) sound of the 90s can really assist in what this market is doing and how it's making people feel. I won't spend much time on the backdrop but if you need a reminder I tried to signal what was to come back in March. Remember it didn't take a rocket scientist to figure out that the impacts of COVID-19 were going to be devastating. These simple facts were in front of us at the time:
- China and the Asia Pacific region had been shut down since early January and even Chinese New Year was canceled (something reported on each day from Beijing by Eunice Yoon and others)
- The market prior to COVID-19 was already near record levels. We hit those levels in my opinion around 2017 when I changed my investment style to ensure I wasn't holding stocks too long (which is contrary to what I believe in). While the market IMO wasn't overvalued, we were in the longest bull market ever recorded (if history serves me correct). Since then, the market continued to melt-up and made us weak in the knees that we could hardly speak. Truss 2019 was a great year, remember: Tesla, Okta, Sprint, Symantec Norton Lifelock, Audentes, Celgene. How good, I got rid of Tesla and Okta way to early. At the time, I was riding great gains, however; they continued to skyrocket further. I feel weak. To put things further into perspective Tesla and Okta aside...the remaining companies I named above ALL got bought out easily making 2019 one of my best years on record investment wise (and the worst personally as I lost my father).
- Finally, I was concerned about the US response to COVID-19. If you flip back to my March posts, I highlighted scenarios that are now playing out when there isn't much of a plan and poor tone at the top leadership --- I said you will get to a situation where US states would start to draw lines in the sand and say citizens from other states cannot cross state lines without strict conditions. Recently, the state of New York told people from 31 states you must quarantine for 14 days (IMO a statement basically saying don't bother coming). I was concerned about the US Lil Nas X culture of "Can't Nobody Tell Me Nothing" to an airborne respiratory disease... who knew that would seriously lead to daily fights about whether masks should be mandated.
So if the market is so SWV "Weak", why is the Nasdaq hitting highs everyday and my portfolio and your retirement plan feeling so good. Well that's where SWV "Right Here" comes in. The Federal Reserve and even Congress has been right here with STIMULUS. I don't have a running total but over $7 Trillion with a T has been pumped into the economy after it began tanking in March.
Lately, there seems to be
Some insecurities
About the way I feel
Where I wanna be
Boy, you know it's with you
No one can do
The things you do to me
~ Artist: SWV Song: "Right Here"
haha The Federal Reserve came out swinging boy. Go back and look at the March lows and damn there were some insecurity about the way we felt. The things you do to us...well here is a list:
- Unemployment + $600
- Federal Moratorium on Foreclosures
- Stimulus Check
- Loans to Small Businesses (PPP)
- Economic Disaster Loans
- Purchasing Company Bonds
- $25 Billion Dollar Bailout to the Airlines
Was this response unexpected. Hell No, just look back to the Federal Reserve did back in the 2008 Financial Crisis. I wrote about it here and it even got its own name: the Tepper rally, for my dawg Billionaire David Tepper who laid out the investment thesis --- You DO NOT fight the Federal Reserve when they come in the big guns...they can print money longer than you can stay liquid (if you were betting the market would fall). And that's exactly what happened...they came in with helicopter money, making it rain. Don't knock my hustle, read here how a strategy from a decade ago prepared us for what to expect: Tepper - Don't Fight The Fed Reminder
I hope this wasn't complicated but I think you now get how to position yourself going into the end of year and 2021. As my friend said it best after reading my posts, the Federal Reserve and others won't let the machine fail (and this is capitalism👌). Fast forward to today, the extra $600 unemployment boost IS NOT being renewed. A second stimulus check is coming but smaller and I believe going out to less people. The Federal Moratorium on foreclosures has been extended but what are you going to do if you are a renter...sign up for paying 1 year of back rent once you finally get a job?? This new stimulus package comes in at roughly $1Trillion which will put the government easily over $8 Trillion in newly printed debt...AND after this round I don't feel there is any appetite for more. With 2 new states recently surpassing New York in COVID cases (California, Florida) and states like Texas and Georgia never really shutting down and cases rising...I'm positioning myself for when the Federal Reserve stops pumping the economy full of steroids (whips I mean stimulus). Delta and American have announced 25K + layoffs after their stimulus ends October 1st and I'm afraid many announcements like this will be coming if we cannot get the cases under control (basically a vaccine). I'll continue to ride the wave and not fight the Federal Reserve but I'll be sleeping with one eye open. Most of my retirement funds are in cash and I'm riding the wave from my personal investment account where I willing to take the risk. Don't get greedy.
My Free Trade Reveal: The stocks that haven't performed well in my portfolio. Notice the theme RETAIL:
COTY - Purchased @ $10
AMC - Purchased @ $11
Foot Locker - Purchased @ $59
Kohls - Purchased @ 57
Tapestry (formerly Coach) - Purchased @ $30
Red Robin - Purchased @ $20
I was up at one time in all these positions except I believe Foot Locker and Kohls and decided to be aggressive. Lesson(s): manage risk, don't get greedy, and don't believe the hype. Restaurants and Retail are not doing well, bankruptcies are rising and I am working to get out of these positions. Peace Out
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