Hello Again,
From September 2018 to December 2018 our portfolio suffered month after month losses. During
those 4 months our portfolio went down by 22%. However in January 2019 our portfolio gained
9.8%. Why did this happen? As I was saying for a long time the Federal Reserve chairman made it known that he was going to go easy on increasing interest rates and that started this rally.
Why did they do that? They were increasing rates to cool down the economy but now there are signs
‘of a global economic slowdown so we might have a “goldilocks’ economy in the US- not too hot and
‘not too cold. Are we out of the woods? No, not by a long shot. In the future, if there are actual
‘signs of inflation, the Federal Reserve will have no choice but raise interest rates in a big way.
Then we will see a severe correction in the market. For the past 40 years I have relied on
‘technical analysis’ for making projections. According to the technical analysis, we could have a
‘leg up in the market now and that would be followed by a severe correction going back to
December lows.
I was going to recommend you purchase GE on 12/1/18 but I made the mistake of not
putting it on the newsletter and also not buying call options on GE at that time. However last month
I asked you to buy 500 shares of GE. After having severe losses on GE for a long time, now we have
a net gain of 34.21% on GE! If I had purchased call options on GE on 12/1/18, I could have made a
10 fold gain in 2 months. GE went down to about $6.75 and my intention was to buy in the money
Call options with very little risk. Now I hear that millions of people are in GE options. This makes me
‘believe that GE could have a severe correction which would give us another buying opportunity.
Whether it is the market or a company stock, it is not abnormal to test previous lows prior to
‘moving up again in a stable manner.
As with the market, if GE goes down, start nibbling (buying) again!
Good things happen to those who are patient.
Have a great month!
Fernando