I am a bit more than an armchair economist but I certainly know less than some. There are factors that can be seen in advance to a degree and some surprise by continuing much much longer than imagined. One such factor is the exuberance of a market that is greedy. With that greed comes a good amount of blindness to the actual world we live in. But enough people pretending there is no cliff ahead keeps the herd moving toward it. Are we on the edge of that cliff?
When big drops happen like recent markets dops, some start claiming this is it, it's over. Not so fast. The momentum can still be enough to recover and go to new highs. I expect the anticipation that the Fed will once again ride in on their white horse, actually green, and prop things up with QE is in play. Will the Fed do that. Of course. They have nothing else. Trump will demand it too and there you go.
What this ignores is the big Debt structure. Lower rates helps keep the deficit lower than otherwise, but does not stop deficits. In fact, as printing gets going, the Fed's balance sheet changes for the worse and inflation will rise. In the end, a new high will usher in a new long bear market. It historically suggests that we could see 80% by the time that bear bottoms. Learn how to short and you'll get a chance at wealth in a compressed time of exposure. I like SPXU for a leveraged EFT that is liquid enough to get in and out. Don't put all your chips in it but why not 25% dollar cost averaged in as new highs tease it will last forever.
I am not giving investment advice but I am doing this myself so just telling you what makes sense to me. I also like Gold but expect a pull back before we really get going. Physical Gold rather than paper Gold same for Silver. Gold has been well above the markets and now that the market pulled back it is greatly outperforming it. Silver has been hated but soon will realize its true value as a strategic metal. Seems like we are trying to get over $35 again and this time might make it. I like Silver.
As the roller coaster gets a push up from existing momentum, take the opportunity to position for the real drop yet to come that will result in a big bear for years. I am not convinced that a Recession is accidental at this point. Trump has reason to push it out now blaming Biden and have time to stage a good recovery before the mid terms. Yes, that is how politics works.
Best,
Donn Marier
DM-Your Own CFO