How Quickly Things Change
Just a few short months ago, I was expecting Hillary to win the presidency, and the market to subsequently crash. Or at least turn significantly downward. I even put my money where my mouth was, purchasing several blocks of TZA. Essentially shorting the market.
As I watched election night coverage and it became more and more apparent that The Donald was going to become our next President, the markets tumbled. Over 800 points as I recall. I was ecstatic. I had almost doubled my money overnight. Literally.
As the night wore on and the world came to grips with the US elections, the markets recovered, and by the time opening bell came around in New York, I was back to even. WOW. What a rollercoaster ride that was! The fundamentals hadn’t changed. Our debt load didn’t disappear over night, and the rest of the global economy continued to struggle. Even now, it all still does.
So what changed and what has fueled this so called ‘Trump Rally?’
Americas mindset. Especially that of corporate America.They have hope, and hope is a powerful thing.
You and millions of other Americans are wondering what to do with our investments as the DJIA continues to eyeball the psychologically important 20,000 mark, like Kilroy peeking over the fence.
The first thing I did was nothing. Knee jerk reactions can be quite detrimental and dangerous to ones portfolio. As I saw the rally was for real, I also noticed folks jumping out of utilities, like the Southern Company (SO), of which I am a holder. I happen to believe in the fundamentals of SO, and like their overall vision and business plan. When I saw the price drop below 47, I was a buyer and moved a substantial portion of my ‘sideline cash’ into this position. With a recent high, and a 2017 price outlook of $54, I should be in line for some nice gains. Not to mention the 5% dividends they pay, of which I use to re-invest.
But what about the rest of my cash? Is it time to move ‘all in’?
Is it too late to catch the Trump Rally? Is the Trump Rally over?
As I alerted the subscribers to my paid newsletter in early December, I believed the markets would ride the rally up to inauguration day before a sharp pullback. I warned my readers to watch for any intra day break of 20,000 and to purchase TZA anytime the DJIA approached 20,000 or as long as TZA was under 20.
The article continued the reasoning saying “This is where the rubber will hit the road, as the saying goes. At this point it will become evident that not even Mr. Trumps wizardry can save us economically. This historical Bull rally will cease and desist, morphing into a hibernating Bear.”
For these reasons, I continue to hedge my bets, my other investments, by holding precious metals and increasing my position in TZA with prices below 20 (Which happen to be near historically low levels).
Like an asteroid hitting Earth, it’s not a matter of IF, but WHEN, and any economist will tell you this bull is long in the teeth and due for a correction. My best guess is an initial pullback on or about inauguration day, while maintaining stability above 18000. Then, as we progress into the first 100 days of his term, see how much of his rhetoric was posturing and where he actually stands on foreign and trade policies.
100 days later will put us at the beginning of May. Depending on his actual policy and posturing, I expect the markets to turn down sooner rather than later, but no later than June 15th.
But hey, I’ve been wrong before and will be again. For all I know, The Donald The President might just boondoggle all of Washington and Wall Street and the Trump rally could continue until Christmas 2017, and reach 21500!
And I’ll be increasing my position in TZA.
Having grown up in the Tri-state area, I am well aware of the name Donald Trump. And if there is one thing I’ve learned from watching him over the years fail spectacularly, only to come back stronger than ever and smelling of roses, it’s this:
Never bet against him. Yet that is exactly what I am doing. Only, it’s not really HIM I’m betting against. But rather I’m betting against the ability of President Trump (or anybody for that matter) to contain this burden of debt looming large over our heads.
The fact that Mr. Trump wants to INCREASE our debt bolstering our weak infrastructure as a CURE to erasing our debt just seems a bit bass-ackwards to me, and is what keeps me up at nights.
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