Randomness coupled with hit and run moves

June 27, 2020
The current environment across so many sectors reflects uncertainty and quick moves in and out of asset classes. Investors are chasing returns, some succeeding and others getting caught in the back wash. This is a dangerous market.

I have done well by being patient and very selective in the equity market, avoiding the chase and turbulence, waiting for better market set-ups. In the crypto market there are very new and significant moves under the flatness of the leaders Bitcoin and Ether.

This past week saw more weakness than strength in equities. The parabolic curve of the Covid-Virus infections spreading across the U.S. is unsettling the economic promise of getting back to normal. The sugar high of FED intervention is waning it would appear, and the instability of U.S. leadership is leaving us rudderless. The 700 point DJIA decline on Friday has created a weekend of uncertainty, and with no positive news on Saturday or Sunday, the market could be in for a very bad Monday. The over-valuation of equities on an historic basis coupled with the randomness of leadership in a crisis environment leaves us set-up for more quick turns and mis-directions. I will remain steadfast in my view that “hiding” in Gold miners and equity dedicated cash is the best position to be in. I do have a small short position on the S&P 500 as I look to Sunday night’s/Monday’s opening.

Crypto is very unsettled as well. Strong abnormal price movements are taking place in the DeFi sector, along with rates on various tokens at extremely high levels given short-term demand for buying tokens on margin. Rates as high as 23% are being offered, and price moves of 2X and 3X are happening in this sector. As I write this, there is a general pullback occurring with some of the more volatile increases being sold to lock-in gains. This is occurring while we have price weakness in Bitcoin and Ether, both trading near recent lows of $9,000 for BTC and $225 for Ether. Something strange is going on, and I am hard pressed to put my finger on it.

I will write more over the weekend under the 187 Portfolio and the Radar Fund tabs, trying to explain my actions in this unusual environment. Presently, my returns on equity Y-T-D approximates 20%. My Y-T-D return on Crypto approximates 93%. Very strong results, but in this environment they could be gone in a flash. I have been here before and I know how quickly things may change. Be careful out there!

I have returned! Been away, moving furniture and stuff from vacation home for upcoming renovation.

Amazing what you accumulate over 32 years. My wife and I as newlyweds bought a home in Vermont to give us an alternative lifestyle out of Manhattan back in 1988. Children came, and we spent many days in Vermont raising out children to ski, to enjoy the mountains, to have a concentrated time with Mom, Dad, and each other, and to build friendships that complimented their New York experience. Now after 32 years, it is time to renovate. It is amazing how much stuff you accumulate in one location over that time. Memories and junk. Love the memories, but clearing out the house took forever. In any event, the sledge hammers have the house now. Can’t wait for November when it will be finished.

Good to be back and writing with you again.

Be safe and healthy,