Commentary for week ending 03/13/2021
The 1.9 Trillion Dollar “COVID Relief” Bill has passed. If only “COVID relief” was actually true about this abomination. Here are some highlights (or “lowlights” depending on your point of view):
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Commentary for this week
The Senate has passed the 1.9 Trillion-dollar bill. I cannot fathom how a married couple making $150,000 per year is “struggling”. And if they have 2 children, they will be getting $5,600! As Margaret Thatcher said: “The problem with socialism is that you eventually run out of other peoples’ money.” I believe that will be extraordinarily inflationary.
So, how should this affect the affect the “Miley Growth Fund” and the “Miley Income Fund”?
As for the “Growth Fund”, be prepared for more volatility and the fund may turn negative for a period. But the fund is intended for medium to long term investors, so I believe that the fund will still outperform the S&P for 5-10 years. And if you have been lucky enough to buy VIP Shop Holdings (VIPS), I would recommend that you take some profits, since the stock has exceeded my expectations by growing at over 50% in the short period since I picked it.
On the “Income Fund”, it has outperformed the “Growth Fund”, mainly because of the presence of several financial stocks like Jefferies Financial Group (JEF). Financials have been going up lately because of the rise in interest rates. As for the poor performers like Pfizer and Merck, I am disappointed, but the stocks pay a healthy dividend, so sit back and collect your dividends and don’t worry.
As for asset allocation today, the traditional 60-40 mix of stocks-bonds is in trouble since interest rates are on the rise. If you are using aggregate bond fund like AGG, I would recommend investigating some actively managed bond funds or perhaps a real estate investment trust like Reality Income Corp (O). Another alternative would be to lighten your bond index fund allocation to 30% and move the remaining 10% into Treasury Inflation Protected Securities (TIPS) and/or into mortgage-backed securities with a fund like GNMA. Moves like this should smooth out your returns. And if you have a 401k, I recommend that you utilize a Stable Value Fund for the 10% allocation – these funds are backed by insurance companies and pay a much higher return than money market funds.
So there you have my current commentary, please feel free to comment or write to me directly.
Dan
Dagnino post 3/1 on Economic Phase, TLT
A couple of takeaways from Dagnino’s post at 12:05am this morning:
- He believes that we are in Phase 2 of the economic cycle. Our algorithms agree with that. It bodes well in the near term for stocks.
- He says that TLT is a trading opportunity. He shows a chart where ROC (Rate of Change) is below a target of -10. To me that is a short term trading opportunity. Good to take a flyer on, but lon-term TLT is going down due to the influx of money into the economy. Inflation will be on the rise at least for a while, and the FED won’t stop it because to a point (2% or so 3 mo treasury rate) that is where they want it.
Retirement ETF Analysis – Month end February 2021
This strategy is based on a straightforward price vs 200 day moving average, plus a confirmation using FRED economic data.
The model sold three ETFs at month end February:
- MUB (municipal bonds)
- XLU (utility SPDR)
- EMB (emerging market bonds)
There were no new BUYs in the period.
February 27 2021 Economic Check
FRED data indicates a continued (perhaps even stronger) confirmation of Phase 2: Expansion approaching Peak. Coupled with the weakness in the bond market, and the impending economic stimulus coming from Congress, this confirms that equities should continue to outperform in the next 30 days.
Psychology of a Market Cycle
Where do you think this market is right now? The pessimist in me tells me that absent the government flooding the market with more money that we are in the Euphoria stage.
Courtesy of wallstcheatsheet.com
My Current Thoughts
I am pleased with the performance of both the Growth Fund and the Income Fund. Note that there is no need for me to post weekly gains or losses as the performance of the funds is tracked on a separate page. But I will say that I was actually surprised by the performance of VIPS being as good as it is. They announce earnings on February 25th, so it may be case of “buy on the rumor, sell on the news”, so don’t be upset if the stock underperforms on that day. I would still hold on the stock as well as all of the others in the portfolio. As for the Income Fund, several of the stocks have underperformed, but remember that the primary purpose of this fund in income via dividends, so again, just sit back and enjoy receiving dividend payouts in excess of the S&P average.
Knightscope
I made a small investment in this company. It is a security robot company that appears to have great prospects. Here is a link for more information:
Invest in the future. | Knightscope, Inc.
This is a very speculative investment, so only invest with money that you could afford to lose. You may make a lot of money or the stock could end up being worthless. I think the company will do very well, but of course there are no guarantees. So please carefully read the prospectus and only invest if you understand both the potential losses as well as gains.
V54 Released – Added Breadth Analysis to Model
I have added a check on Breadth to the base algorithm. This is looking at the number of stocks reaching new highs versus new lows, the number of stocks advancing versus declining, and the number of stocks above or below their 21dma. It looks at this data across the S&P100 (very large caps), S&P500, S&P400 (midcaps), and S&P600 (small caps). Version 54 performs with a higher RAR and higher Win Percentage than V53.
Charter-Communications-and-14-Other-Undervalued-Stocks-That-Are-Growing-Strongly-_-Barrons.pdf