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SELLING

March 18, 2020. We are in the process of trying to sell ALL positions in the Core Portfolio, EXCEPT for oil/energy and the corporate bonds.

This is D-Day. Prices are COLLAPSING. As everyone knows we are in retirement and cannot afford to lose everything. If you are younger and can endure the pain to wait a year or two to recover, that is a good choice as you will continue to collect dividends.

There are two Coronavirus cures that are being tested. If we see these in widespread use, the markets would probably take off to the UPside.

VACCINETEST

CURE1

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The S&P 500 index has now plunged 29% in the 18 trading days since the peak in February 19 and is below where it had first been on March 1, 2017 – which was over three years ago. In other words, the S&P 500 unwound three years’ worth of gains in 18 trading days.

Another way of looking at this: Over the three years from March 1, 2017, through the peak on February 19, 2020 (3,386), the S&P 500 had gained a blistering 42%, all of which are now gone.

The FED is trying but nothing is working.

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SOLD CIM

March 17, 2020. We sold another Core Portfolio position: CIM

The Core Portfolio is now down a ‘reasonable’ 13% from the highs. Not too bad considering. Scroll down for recent posts.

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SELL

Tuesday March 17, 2020. We sold the business development company GBDC a holding the Core Portfolio. We are ALSO trying to sell MRCCL but have been unable to get a bid.

The press conference going on right now is projecting a very positive view of the virus situation. The markets are off the lows. We are beginning….beginning to think we may start seeing stabilization in the financial markets.

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There are too many non-quantifiable risks with a global recession looming, as noted by David Rosenberg:

“The pandemic is a clear ‘black swan’ event. There will be a whole range of knock-on effects. Fully 40 million American workers, or one-third of the private-sector labor force, are directly affected ─ retail, entertainment, events, sports, theme parks, conferences, travel, tourism, restaurants and, of course, energy.

This doesn’t include all the multiplier effects on other industries. It would not surprise me at all if real GDP in Q2 contracts at something close to an 8% annual rate (matching what happened in the fourth quarter of 2008, which was a financial event alone).

The hit to GDP can be expected to be anywhere from $400 billion to $600 billion for the year. But the market was in trouble even before COVID-19 began to spread, with valuations and complacency at cycle highs and equity portfolio managers sitting with record-low cash buffers. Hence the forced selling in other asset classes.

If you haven’t made recession a base-case scenario, you probably should. All four pandemics of the past century coincided with recession. This won’t be any different. It’s tough to generate growth when we’re busy “social distancing.” I am amazed that the latest WSJ poll of economists conducted between March 6-10th showed only 49% seeing a recession coming”.

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DIDN’T BOTHER TO LOG IN

Monday March 16. Over the weekend we wrote a post which was scheduled for this morning. Events are changing so fast that the post was deleted as it was already out of date and useless.

Markets are collapsing and panic is prevalent. Yesterday we ventured out to a normally very busy Mexican restaurant and it was almost empty. The upcoming vacation is nixed. (We dare you to try and get United on the phone.)

Today we didn’t even bother to log into our trading platform. We have no idea how much the portfolio is down. Why stare at the pain??? We have not done this since the 2008-9 collapse. We are now at the point in the financial markets where it makes sense to just sit back and watch. You can’t sell into a collapsing market, and you certainly can’t buy.

—–There are numerous talking heads and financial advisors out there that have been telling their followers to buy, buy, buy for the last few weeks……as prices plummeted. Man oh man, are they hurting or what? In contrast, shorting would have been very profitable.

—–We have been telling you to sell, sell, sell!!! In our opinion, there will be plenty of time to buy as a recovery becomes evident.

Possibly good news: It is our understanding that China and South Korea are on the rebound with very few new cases reported. It is estimated the U.S. will take another month or two.

If you staying home, or looking for diversion, there is an EXCELLENT series on Amazon Prime called Jack Ryan. This is one of the best series we have seen on Netflix or Amazon.

Author Tom Clancy introduced the character of Jack Ryan in a series of books before Ryan headed to the big screen in several films. Now the former U.S. Marine is featured in an episodic series for the first time, with John Krasinski portraying Ryan in this Amazon original thriller that centers on Ryan as an up-and-coming CIA analyst.

Optimism grows that drugs from past outbreaks may treat coronavirus

NOW IN OUR 8TH YEAR. NOTE TO NEW READERS: Before you buy anything we discuss here, GO to the Core Portfolio tab to see a CURRENT listing of holdings. Don’t forget to hit the like button. Our host WordPress is running ads in the blog and we receive NO compensation from this advertising.

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MORE SELLING

March 13, 2020. Above video: Informative video about markets, with many interesting ideas.

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Energy/oil: We are reading that Saudi Arabia cannot continue with their oil policy. We anticipate oil will head back up, and we will HOLD our oil positions.

Virus situation: No matter how you spin it, infections are getting worse. This will negatively affect production, which negatively affects stocks and profits.

As mentioned yesterday, our selling will continue if we get a rebound–which we did today. Right now the markets up almost 5%. We plan on reducing selected positions by 50%. So far today we sold the entire position of BXMT…also PCI

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HERE is a very interesting article

If massive lockdowns are occurring on about day 22-23 in other countries, that means we may have 7-8 days before we see major lockdowns and quarantines here. That would put us at March 19th or 20th. We may see some early lockdowns of cities or regions where the virus is rapidly spreading like Seattle and New York City. The lockdowns in other countries expanded in about a week to encompass greater geographic areas and larger numbers of people. This would put us at approximately March 26-27th.

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PANIC. CASH IS KING

March 12, 2020. The Trump speech was a dud and we saw panic selling this morning-Thursday. Financial markets are collapsing.

We started selling a month ago. But despite our efforts in raising cash, the sentiment is so bad that investors are now throwing out the baby with the bath water. In looking at the technicals, we may get a rebound, (assuming the Feds come in with stimulus)

We were expecting an additional 10% decline over the next few weeks, but WE ARE ALREADY DOWN 7% TODAY-in one day.

A truly horrendous decline today. At the start of trading today, we had planned on additional selling. But the ‘bids’ were so bad (low), that we held off due to the huge losses that we would had incurred. There were buyers (which is quite shocking) but at fire sale prices.

Fear levels are now so high that a Federal stimulus program will probably NOT do much to instill confidence.

We are still going to watch for possible ‘sell’ opportunities today. If a Fed program gives us a rebound, we will probably start aggressively selling.

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IS IT OVER? DON’T BET ON IT

GOLDMAN SACHS projects additional 15% DECLINES.

March 11, 2020.  The so called financial gurus out there continue to recommend buying stocks.  Wow this is shocking.  Don’t be lulled into thinking that we are hitting the ‘bottom’.  As we write this, the DOW is down about 680 points.

You should have been reducing your stock market exposure over the last month, and if you buy only stocks, it is best to be totally out of the market.  Our Core Portfolio is primarily bond type income investments and are we are down 4.5% which is really not too bad compared to the stock averages of 17%.W

WE ARE IN CAPITAL PRESERVATION MODE.     

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Poor old Biden has dementia and his family members are involved in corruption.  Sad.

A new report reveals legal problems and allegations of possible fraud involving former Vice President Joe Biden’s brother James, in the latest instance of the Democratic primary front-runner’s family members’ dealings drawing scrutiny amid his presidential bid.

According to Politico, James Biden’s business with medical companies – including Americore Health – has led to allegations that he potentially engaged in fraud and traded on his brother’s name, by claiming Joe was interested in the venture and the family name could provide opportunitiesLINK TO FULL ARTICLE

NOW IN OUR 8TH YEAR. NOTE TO NEW READERS: Before you buy anything we discuss here, GO to the Core Portfolio tab to see a CURRENT listing of holdings. Don’t forget to hit the like button. Our host WordPress is running ads in the blog and we receive NO compensation from this advertising.

As Sven Henrich noted over the weekend, we’re faced with the most critical time since the financial crisis. That’s not my opinion, this is what the $VIX says. It’s behaving in a very unusual and rare way and everyone better pay very close attention. When I made the $VIX 46 call in January it seemed like an idiotic call to make for $VIX moves into the 40’s are extremely rare. But it happened and $VIX hit 46 a week ago and now on Friday $VIX hit 54 before again reverting below the trend line I had originally drawn in January (see Big Calls).
What’s the $VIX really saying here? That the Fed and every central bank on the planet are at high risk of losing total control over these markets in which case $VIX could go to 90 and $SPX could ultimate drop to 1800-2000. That’s not hyperbole, that’s what the charts say, the same charts that told you $VIX 46 was coming and that suggested a big drop was coming.
Last week’s panic rate cut by the Fed was a complete failure.

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