How Long Can This Last?
Performance Numbers
Our aggressive growth model is once again outpacing the S&P 500 Index. We’re up 8.48% year-to-date, while the S&P sports a mere 4.25%. And get this: that 8.48% performance occurred while holding 18% of assets in cash.
There’s more: our fixed income accounts now enjoy a 4.16% gain, just barely behind the S&P itself.
So far, so good.
The Market
I have no idea when this party will end. We remain on guard for a pullback, if (and when) it ever happens.
Right now, the market likes President Biden and his stimulus package. Stimulus money means more consumer spending, and money printing means ever-increasing demand for assets … such as the stock market. Low interest rates continue to fuel the boom in new home sales. Those low rates and the increase in the money supply also propel our holdings in XLY (consumer spending) and TQQQ (technology companies).
Bitcoin
Yesterday, the financial world absorbed the news that Elon Musk (whose net worth now exceeds Jeff Bezos’s bottom line) has purchased $1.5 billion worth of Bitcoin for Tesla’s treasury account. Further crypto news included the move by Bill Miller to devote 15% of his Miller Opportunity Trust to Bitcoin exposure through purchases of Grayscale’s GBTC (a trust instrument backed by Bitcoin).
Mr. Miller, we should note, is a very old-school value investor. He gained much of his fame when he led the old Legg Mason Value Trust. His move might just resemble your 90-year-old grandmother signing up for Tik Tok, Twitter, Instagram, and Facebook all on the same day. In a word: jaw-dropping.
Our Exposure
Some might ask about our approach to Bitcoin. Right now, we enjoy significant Bitcoin exposure through our ownership of Tesla. We own four ETFs with significant Tesla holdings:
· QCLN – Tesla is the #1 holding
· PBW – Tesla is the #1 holding
· XLY – Tesla is the #2 holding
· TQQQ – Tesla is the #4 holding
Strategy to Protect Your Wealth
Why are we holding 18% cash? Shouldn’t that be invested to enjoy these amazing gains? Why sit on money that’s just sitting there?
Because we stand ready to play defense.
Remember last Spring? The market plummeted very quickly. We weren’t caught unawares. We bought some ETFs that go up when the market goes down. Using this leverage, we protected our clients against one of the most frightening declines in recent stock-market history.
If our technical analysis portends similar dives in the market, we are ready to deploy that cash to a defensive position that will protect your account.
As Always
Please feel free to call my cell number whenever you have any questions or comments: 240-401-2355.
Have a wonderful week.
Sincerely,
Jack