Hi Again,
Once again take a look at our score card; in June 2020 we had an average gain of 5.59%, in May 2020 the gain was 6.05%; and that came after a 7.66% gain in April 2020. We are in a very confusing time. There is a big disconnect between “Wall Street” and “Main Street” (economy). Since the end of March, the most prudent investors were avoiding this market but now slowly but surely they are getting back-as it always happen during the last stages of market that is overly bullish. The main reason why the market went up since March is that the Federal Reserve has been printing like there is no tomorrow. In one word- liquidity! How long can this go on? No one knows for sure but I think we could have a 50% to 80% correction within the next 12 months. Apple, Amazon, Microsoft, Google (Alphabet) and Facebook has a combined market cap that is bigger than the Russell 2000 stocks!! That is scary!
More than 4 year ago we bought Apple at an average cost of $91.50; remember that time? That is the time when Carl Icahn sold all his Apple holdings and all top analysts stated that Apple is no longer a growth company and it is too big to be a growth company. On 6/30/20, Apple was at $364.80- a 293% gain! Our Uber gained 116% in 6 months! Boeing gained over 100% in 3.5 months. Casino WYNN also gained over 100% in 3.5 months.
There has been a lot of talk of all the sports gamblers who got in to market trading for the first time this year. You must have heard of the sports gambler from Barstool, Dave Portnoy. He does not understand that there is a difference between trading and investing. He once stated that Warren Buffet is “finished” as a trader and he is the new king. Warren Buffet was never a trader. Dave has over a million followers on his twitter so they were following his actions and in day trading in 2020, he turned $3MM to $300MM in less than 6 months! Some people were asking the SEC to investigate him. Did you hear about the college sophomore who killed himself over day trading? I heard that he was trading “naked stock options” and he found that he lost $500K in a day but his brokerage company stated that it was just his understanding as he did not understand options. These are all signs that the market is topping but this could go on like this for a long time. One of the best market technicians I follow call herself a “Cautious Bull”. As she likes to say, “ I do not see any sell signals in NASDAQ”! Now Trump does not boast about the DOW and even he talks of the NASADQ. That shows he pays very close attention to the market.
Have a great month!
Fernando