Every day I go through roughly 200 stocks/indices/indicators, several times per day, looking for signals, attempting to connect dots and ultimately, hoping to find risk/reward situations that create outperformance.
The title Lies, Damn Lies seems appropriate as when the markets want to reveal any kind of truth, they first do so through blatant lies. Conversely, whenever truth appears apparent, there is likely to be deception involved.
These are simply thoughts (some completely random) as I attempt to connect the dots:
- What if the Q4 2018 pullback we experienced was the first bull market reset of this secular bull market? Every investor needs to weigh for themselves what that means. Pullbacks during secular bulls and cyclical bulls are completely different animals. You can take whatever you thought you knew about the market from 2000-2013 and throw it out of the window when it comes to the current market environment. There are other periods that are far more instructive. Those periods tell us that if this was indeed a reset of the secular bull, the next leg will be far more powerful than than anything we have witnessed up until 2017. Not enough investors are discussing this currently. Getting it right is the difference between being a top performer over the next couple of years and being roadkill.
- Back to gold. There are what I believe to be multiple short to intermediate term headwinds headed the way of metals. An acceleration of the current uptrend in the equity markets is going to bring money into risk on assets exclusively. Gold is not that. The strengthening US Dollar will begin influencing gold negatively. The weakening Yen, especially, is kryptonite to gold. The consensus is now squarely in the bullish gold camp, as expressed by a near uniform bullishness on emerging markets (EM bullishness and gold bullishness go hand in hand). Time to get short in some way, shape or form.
- If the Fed has indeed exited stage left, then the markets may run farther and faster than any are expecting. If we see continued equity strength while the Fed sits idly by into the summer, then I suspect the markets will go haywire on the upside. Dow 30,000 isn't out of the question this year on the back of an absent Fed, economic stability and a comprehensive trade agreement between US and China, which will kick off all sorts economic tailwinds globally.
- Have taken some outsized exposure to both GRUB and Z as long-term investments. Both are outstanding companies that are highly disruptive. GRUB will become an aggregator of restaurants similar to what online travel websites, such as Priceline, have done for airfare, hotels etc. Z has vast potential within the real estate space, which is still in horse and buggy mode. Eventually the click to buy model without onerous paperwork and unnecessarily high commissions to multiple parties will become how we buy real estate. Z is in a leadership position to disrupt the industry. Both GRUB and Z have been severely punished by the Q4 pullback. Typically, these types of companies regain their spot as leaders in the market fairly quickly once investors realize that a bull market has legs. I expect both to eclipse their old highs, perhaps later this year if things progress as I suspect they will.
- Semiconductors are ripping. I've been talking about them basically nonstop for awhile now. Upside on the SOX is 1500. That's more than 10% above where we are now. Could get there within the next couple of months.
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