Commentary for the week ending 08/07/2021

Hello, folks.  I have been monitoring the market situation but I haven’t had much to add to anything that I had already said.  But today I have some comments.


On the Infrastructure bill, I hope that it passes.  As I previously said, it does make sense to invest in improving our roads, bridges, airports, and broadband.  However, it doesn’t make sense to overspend with the Democrats 3.5 trillion wish list.  I think that it will be inflationary.  


Speaking of inflation, I think that we are on our way to inflation.  The jobs report indicating higher job growth than anticipated.   And interest rates are going back up.  Employers have been forced to pay more because of employee demands caused by government largesse.  And I don’t think employers are going to be able to go back to pre-COVID wage levels, because it is very difficult to take away something that employees are used to.  So “wage push” inflation is on the way.  And look at the problems created when Congress let the rent forgiveness disappear – Biden forced the CDC to put a moratorium on evictions (a probable violation of law that he even admits).


As for the growth fund, I am generally pleased with the results.  As I recommended before, please take some profits in the big gainers like Fortinet if you can.  As for NFLX, which has underperformed, I still think that it will improve by the end of the year as folks who think that that people will switch to competing streaming services are mistaken.  I think people will add Disney Plus, HBO Max, or others, but will still keep Netflix, as it has the most unique content.  As for the two Chinese stocks in the portfolio, all I can say is that I think that the Chinese government will recognize the folly of going after some of the best earners in the country.  And 100 million Chinese people own stocks!  This whole thing reminds me of the “Great Leap Forward” and “The Cultural Revolution” of the 1960’s and 1970’s under Chairman Mao.  Eventually the Chinese government realized the folly of these measures, and Deng Xiaoping invalidated the Cultural Revolution.  Fortunately, the current attacks on companies have not resulted in deaths like “The Cultural Revolution” did (at least to my knowledge!) but I think that the government is seeing the damage down to their country’s bottom line and will eventually lighten up on the pressure.  So, I recommend holding BABA and VIPS, but I am not sure I would add to my position if I were you.  I would actually buy Amazon at this point, as I think that the recent downward pressures are unjustified, and I think the stock is undervalued and could fetch $5,000 by the end of next year.  


As for the Income fund, I don’t recommend any changes, other than a comment on Merck.  I think Merck is undervalued and could fetch as much as $100 by next year end.


So, folks, hang, in there and I hope you are well.  Happy Investing!  





1 thought on “Commentary for the week ending 08/07/2021”

  1. As an “old” (in more ways than one) deficit hawk I agree that this proposed “soft infrastructure” 3.5T spending will both increase inflation and be bad for the country at large. The national level political element in this country has been broken for some time, and yet we’ve had a long bull market run. Something (inflation, COVID, some other black swan event) will break that market run and I suspect we are seeing the first indications of it even though the market is up over 1% this month.

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