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LONG TERM: MORE DECLINES

 

Ironic that the Russian “collusion” crowd are about to nominate a communist for presidency.

March 2, 2020.  Concern about the corona virus is hitting middle America.  Traffic on our little suburban main street is slow and anecdotal evidence points to DECLINING sales (altho the grocery stores are evidently packed).  People are very nervous and it is apparent they are cutting back on spending money.

We have been selling Core Portfolio positions for months.  BUT, we should have accelerated the pace of selling Monday and Tuesday of last week when we were seeing huge declines.  We were expecting some sort of rebound during the middle of the week where we could sell at higher prices….but instead the markets veered DOWN into the ditch.

From http://www.realinvestmentadvice.com:

Currently, not only is the market extremely oversold on a short-term basis, but is currently 5-standard deviations below the 50-dma.
Let me put that into perspective for you.
1-standard deviation = 68.26% of all possible price movement.
2-standard deviations = 95.45%
3-standard deviations = 99.73%
4-standard deviations = 99.993%
5-standard deviations = 99.9999%
Mathematically speaking, the bulk of the decline is already priced into the market.
“I get it. We are gonna get a bounce. So, what do I do?”

It is highly advisable to use ANY reflexive rally to reduce portfolio risk, and rebalance portfolios. Most likely, another wave of selling will likely ensue before a stronger bottom is finally put into place.

==============We are still expecting a rebound this week (up 194 pts right now) and will most likely be in SELLING mode where we can get higher prices.

The Core Portfolio cash position now stands at 25%.  But in retrospect we should have been selling much faster.  The income oriented dividend paying Core Portfolio is now down about 2.5% which is much better than the 10%-12% declines in SPY and DOW.   

CAPITAL PRESERVATION TO FIGHT ANOTHER DAY

Bottom Line;  We have lived thru a lot of these ‘crashes’ and ‘declines’.  The current panic will end and we will get back to normal.  But right now, it appears bleak. 

Dozens of Democratic superdelegates say they’re willing to sacrifice party cohesion to prevent Vermont Sen. Bernie Sanders from becoming their party’s nominee at the Democratic National Convention in July.
The New York Times spoke with 93 superdelegates following Sanders’s victory in the Nevada caucuses on Feb. 22, the vast majority of which said they believe the Democratic Party is headed toward a contested convention. Of the superdelegates interviewed, 84 said Sanders does not deserve to become the party’s nominee based solely on having secured the most, but not over 50%, of the delegates during the primaries and caucuses.

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