“Damn the torpedo’s… Full speed” … ahead!
I used this somewhat doctored quote from Union Rear Admiral David Farragut to title my final post of 2019. Back in the day (1864) the torpedoes Farragut was damning happened to be contact mines that were easily able to blow a ship out of the water. There were many afloat in Mobile Bay. This is how Farrugut exhorted his fleet to sail on, forget about the mines and attack a Confederate fleet bottled up in the harbor. The Union fleet prevailed and won the day.
I asked the question: “Is the stock market today (12/29/2019) sailing in torpedo infested waters?“
Absolutely. It is always sailing in a sea of known and unknown risks. Since the bottom in 2009 a legion of talking heads, pundits, the Wizards of Wall Street have been warning us about these submerged killers. For the past seven years their warnings have continued as we have marched to new secular bull market record highs.
There are two things that worry me about this: someday they will be right (in the short-term and we get a cyclical bear market) or some day they will turn bullish, thus signaling the end of this great market run and the imminent beginning of a new secular bear market.
One of these submerged killers got us in March/April
A Covid 19 torpedo ripped into the side of our ship and did tremendous damage. The pandemic was a true ‘Black Swan’ event … a bolt out of the blue … extremely contagious in nature and very lethal. The shock was exacerbated by the usual culprits, bad market mechanics (high speed trading, computer automated algorithmic trading) and a media and punditry corps that jumped on the negative implications of the virus. They never had interest in providing fact and perspective to the already spooked market. Their interest was focused on gaining and keeping your attention, not your pocketbook.
It turned out that there were some automatic compartment doors that immediately closed to wall off the damage (stimulus and Fed policy). Divers immediately went into action to repair the damage (vaccine and therapeutic development). It also turns that because the rest of the ship was in such good shape [tech did not miss a beat, work arounds ,,, people working from home (Zoom calls), construction, etc. The ship listed a bit but then righted itself.
Everything I’ve described here is normal and to be expected in the stock market.
Parting thoughts for 2020
I do not know about you but from my vantage point 2020 has been a year that put us all through the wringer, especially those displaced economically by the pandemic. Regardless of your politics we appear to be getting to a more normal presence in the White House, in that it will not or should not be front page, in your face everyday … new crisis/ twists and turns, etc. I think the country needs a rest. It needs to heal.
Something market participants may really worry about early on is the Georgia senatorial election on January 5, 2021. Should the unspeakable happen (I’m being facetious here) and the Democrats pull out victories in both contests, there will be a great outcry in the land: Now they’re gonna kill the goose (capitalism) that laid the golden egg. Don’t believe it. This is just the same as rhetoric floating around about the impact of a Biden victory: the market would be toast. It hasn’t been.
Regarding the goose that lays those golden eggs (the stock market), my view is that with all the stimulus and zero interest rates the secular bull market continues but with a continued rotation away from the HAVES (BigTech) into the great mass of HAVE-NOTS (Cyclicals, value and small cap). I embrace the change to what could be a very fun year.
Thank’s so much for tuning into kortsessions.com in 2020. I really appreciate your readership. I want to extend my best wishes to you and your’s for a healthy, happy and prosperous 2021.
The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities. I may, from time to time, mention certain securities for illustrative purpose, names where I personally hold positions. These are not meant to be construed as recommendations to BUY or SELL. All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.
Happy New Year!
Thank you for your always optimistic and calming views
Bill, thanks much for your regular publications. I appreciate your perspective and feel reassured after absorbing your “been there, done that” optimism.
JACK, thank you for checking in. I appreciate your kind comments and encouragement. Happy new year!