Category: Markets

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A Light at the End of the Tunnel

First of all, I am very happy to see new data coming in these last few weeks indicating the Virus is far milder than initially believed. Although the World Health Organization initially indicated at least a 3.4% fatality rate, it appears the fatality rate may even end up closer to 0.05% – 0.4% roughly in the range of the flu even without a vaccine in place.

It appears the risk to young, healthy people is negligible while the older population is at greater risk especially if there are certain other pre-existing conditions present. A large portion of deaths, around 50% in some regions, are in nursing home populations. Lockdown policies around the nation should account for these facts and disparities.

We’re also starting to see COVID-19 hospitalizations waning. There were but a few overwhelmed hospitals, the nation has both excess ICU capacity and excess ventilators at this point contrary to the initial projections from the IHME and many States’ Governors’ offices. In fact, many hospitals around the nation are losing millions of dollars and furloughing staff.

In other words, the light at the end of the tunnel is coming into view. The market has been anticipating and rejoicing at this sight evident by the S&P 500’s ~30% rally from the March lows.

What’s Next? Continue reading “A Light at the End of the Tunnel”

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Tesla Update

Back in February I did something rare (for me) and wrote about an individual stock, Tesla. I essentially pointed out the absurdity of the valuation based on Tesla’s revenues, earnings, margins and vehicle sales in the context of the industry.

That was written on February 4th upon which Tesla ticked a high price of 968.99. Over the next two months Tesla’s stock price proceeded to decline over 60% to $350. The stock has since rallied to over $800 as I write this. What a ride.

Last night, Tesla reported Q1 earnings. As usual, there are some inconsistencies and concerns in their financials so let’s take another look to see if the $800 per share price is justified. Continue reading “Tesla Update”

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What Have the Bond Markets Been Up To?

First of all, I hope this finds you well. We say that a lot, but it has such a deeper, intense meaning today, doesn’t it? In any case, I truly hope you and your families are safe.

As for our family, we’re doing just fine. I actually think our middle child, Lexi (6), is going to go back to school far ahead of where she was when they dismissed! She’s been cranking through the math workbooks that Mom got her.

I’ve got so many things I want to talk about that I think are important right now. Don’t worry, I’m only going to focus on one topic here, but it was a struggle to figure out what I wanted to address tonight.

Ultimately, I’ve decided to talk about the bond markets as the stocks markets have, understandably, been getting all the attention. Other topics you can expect in coming days and weeks are: precious metals and gold miners, big picture overview, coronavirus metrics you may not have seen yet, deflation vs. inflation, my market timing strategies’ performance results through this historic decline (preview: they have fared very well). Continue reading “What Have the Bond Markets Been Up To?”

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They Say It’s A Bear Market but It’s Not Really…Yet

Lots of articles out today claiming we are now officially in a bear market, but that’s not really true…at least not yet.

Technically, a bear market is at least a 20% decline from a peak (using closing prices). I’m not a huge fan of that definition since it’s a bit arbitrary, however, it’s widely used so we’ll stick with it to be consistent with the rest of the industry and financial media.

Yes, today, the Dow Jones Industrial Average (DJIA) closed more than 20% lower than it’s all-time high closing price from 2/12/2020. However, the DJIA is only made up of 30 stocks. I have no idea why people are so intent on following the DJIA when it’s a tiny sliver of the U.S. stock universe let alone the global stock universe.

In any case, the S&P 500 still has not technically met the 20% threshold. Neither the global stock market (MSCI All Cap World Index) nor the broader U.S. stock market (Russell 3000) have met that threshold either although all are very close. So, for now, the bull market that began in U.S. stocks back on March 9, 2009 is still in tact.