Editor’s Note: As Chief Investment Strategist of Total Wealth, Shah believes in making his track record of recommendations easily accessible to all readers within seconds – and that’s why he’s compiled an Archives page.
Just when everything was looking like so many presents around the Menorah and under so many Christmas trees, the Grinch appears.
Has he stolen investor optimism, or is this just a smirky reminder that not everything’s right with the world?
Dec 18, 2020
If you want to know why I’m so bullish, all you have to do is look at the Russell 2000: It’s on fire.
The “rotation” trade has done A LOT for the Russell 2000 a lot for equities across the board.
“As long as the music is playing, you’ve got to get up and dance.”
That’s your Capital Wave Forecast. It’s short and sweet and reminiscent of another time when markets were rocking, and investors were raking in the dough.
You might even say, “It’s like déjà vu all over again,” as famously said by Yogi Berra.
Yes, I’m still very bullish. And, yes, maybe my eyes are getting a little glassed over. After all, I’m calling for another 10%-15% rise in benchmarks in 2021 – maybe more.
But that doesn’t mean I’m blind to what’s going on.
In case you haven’t noticed, there are a lot of newly minted SPAC IPO pickup artists cruising the financial highways and byways looking to hook up with private operating companies, merge them into their magic SPACs, and exit the highway, where some will break down, if not blow up, on some dead end.
Even traditional IPOs are coming out fast and furiously, with Airbnb and DoorDash debuting this week.
Everyone in IPO Land is partying like it’s 1999. Is this “déjà vu all over again,” or is this time different?
This Total Wealth is about something different today.
It’s about you, me, and the country. It’s about the whole COVID-19 picture, at least the picture we think we see. It’s about the surge in the U.S., Europe, and elsewhere, but not in one country.
It’s about what you think is going on, what you think we should do, or shouldn’t do.
Yes, I’m “isolating” but I’m not isolated. I’ve got a huge audience here and I’m calling on you to help us all understand how you all feel. And why we’re suffering and China’s not.
So, please send me your comments, experiences, thoughts, and what you believe we should be doing.
Dec 02, 2020
Blockchain is here to stay. Bitcoin, maybe not so much.
Just because bitcoin made a new all-time high of $19,920 on Monday (enthusiasts round that up to $20,000… close but no cigar), which is “about” $137 higher than its previous high back in 2017 (all over the Internet you’ll get different prices for the old high, hence the “about,” from BBC news), it doesn’t mean squat.
Why not? Because bitcoin is like ether, or Ethereum if you prefer; it’s made up. It’s made out of, make that mined” out of, thin air.
That doesn’t mean it isn’t a store of value, though it isn’t. It doesn’t mean it isn’t digital gold, though it isn’t. And it doesn’t mean it isn’t perfectly “permissionless,” perfectly fungible, perfectly private bearer e-cash, though it isn’t.
And it certainly doesn’t mean the price of bitcoin can’t go a lot higher, because it can.
Here’s the truth about bitcoin and what you should do about it as it ticks higher…
I’ve been having lots of conversations lately with lots of investors (on the phone, by the way). And there’s something creeping into their optimism: doubt.
It’s understandable. Amidst the rampant bullishness that seems to be pervasive across all demographics of investors, from retirees and Baby Boomers, to Millennials, Gen Xers, even Gen Z, there are signs of that smack of bullishness reminiscent of 2007 or 1999, two years that preceded spectacular crashes.
Last week, a shortened trading week, saw more of the same – more record highs for benchmark indices, that is:
- The Dow rose 647 points on the week, closing Friday 2.2% higher on the week, after notching a new all-time high of 30,116.51 earlier in the week.
- The S&P 500 notched a new high too, and closed the week up 2.2%.
- The Nasdaq Composite, which had been lagging, made a new high too, ending the week 2.95% higher.
- And the Russell 2000, measuring stick of the “value” and “rotation” trades, also hit a record, ending the week up a stellar 3.9%.
Irrational exuberance? Yes, I’d say so.
Are things that good everywhere, in all sectors, in all industries, by all measures? No, I’d say not.
Hypocrisy is everywhere, even in U.S. capital markets.
Maybe it’s because U.S. capital markets aren’t really “free markets” anymore, meaning they’re manipulated by the Federal Reserve, by so-called investment banks, by fund sponsors selling thematic products that aren’t true to their mandates, and by institutionalized greed.
Now U.S. institutions are buying Chinese government bonds directly from China. Talk about hypocrisy.
American investors shouldn’t buy Chinese government bonds (CGBs), no matter how tempting they may look, nor should our supposed allies in Europe for that matter, for a lot of reasons.
Nov 23, 2020
Investors are looking past almost all bad news, anywhere, and becoming downright giddy.
Last week, Investors Intelligence tallied the percent of bullish investors it surveyed at 59.6%. That’s up slightly from the previous week’s tally of 59.2%.
At the same time, bears continued to retreat into the bushes, with only 18.2% of surveyed investors feeling bearish, down from 19.4% the week before.
All that giddiness, however, didn’t lift all equity benchmarks last week.
The Dow was down a slight 0.7% on the week. The S&P 500 was down 0.8%. But the Nasdaq Composite edged 0.2% higher.
Then there’s the Russell 2000. It rose a very robust 2.4% on the week, notching a new all-time high.
And that’s where the story is…
Nov 23, 2020
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Nov 19, 2020
The world’s changing, quicker than ever.
And yes, that includes COVID-19 changing our future, but probably not in the ways you’re thinking.
The pandemic’s an accelerant; it’s speeding up societal, commercial, and moneymaking trends most people never saw coming.
But those trends are already here, gathering momentum – some because of COVID, some because we’re stepping into our ineluctable future anyway, and there’s no turning back. Not now, not ever.
I call the increasingly rapid adoption and implementation of trends, that with unimaginable speed will accelerate changes in how we live, work, play, and make money “Hyperdrive events.”
I like Alibaba Group Holding Ltd. (NYSE:BABA)’s stock down here; it’s a buy.
But not everyone would agree with me, starting with the investors who wanted to buy into Ant Group’s IPO, but now must wait for who knows how long.
Ant’s botched IPO, courtesy of the financial giant’s founder Jack Ma insulting Chinese regulators days before it was about to debut, hurts Alibaba, which owns 33% of Ant Group.
Alibaba shareholders bid up shares of the e-commerce giant, China’s largest-listed company, anticipating its value would soar when shares of Ant Group started trading and skyrocketing as they were expected to do.
With the scrapped IPO and Alibaba tanking, investors are wondering if Alibaba shares will sell off more and when, or if, Ant will ever IPO.
Nov 16, 2020
Last Monday, the Dow soared 834 points (2.95%), the S&P 500 rose a robust 1.17%, and the Russell 2000 rose a crazy 3.7%, all on the news that Pfizer Inc. (NYSE:PFE) and BioNTech’s COVID-19 vaccine was 90% effective.
For the week, the Dow ended up 4.1%, the S&P 500 notched a new all-time closing high at 3,585, up 2.2% on the week, and the Russell ended the week up a stellar 5.4%.
The Nasdaq Composite didn’t fare so well. It was down 1.53% last Monday and down 0.6% on the week.
This morning we’re off to the races, again. It’s now Moderna Inc. (NasdaqGS:MRNA)’s turn to wow markets.
The company announced its COVID-19 vaccine looks to be 94.5% effective. That’s staggering.
For some perspective, the measles vaccine was 93% effective and essentially wiped out that plague.
Investors are taking profits in tech stocks and buying “value” and “reopening” stocks like never before.
Even if the “rotation” isn’t unexpected, the speed at which it’s happening is unprecedented.
Nov 11, 2020
It’s often said when equity markets rise in the face of negative news, economic worries, and other impediments to investor sentiment and earnings prospects, that the market’s climbing the “wall of worry.”
Newsflash! The market hasn’t just climbed a wall, it’s knocked down every wall in its path and isn’t worried about anything.
But that doesn’t mean everything’s coming up roses.
Global virus cases just topped 51.5 million. The infection rate in the U.S. is skyrocketing. Over 143,000 new infections were announced on Monday. The average daily rate of new infections in the U.S. in now north of 900,000 a day over the past 30 days.
As bad as that is, and it’s worse than investors realize, is that hospitalizations just hit a record 61,964 as of last night; that’s 2,024 more than the peak 59,940 hospitalizations in April.
How many of the newly infected millions of Americans are headed for hospitals remains to be seen, but doctors expect them to overwhelm healthcare systems faster than they’re prepared for.
Still, equity investors are all risk-on and damn the torpedoes.
It’s over. Even though there are some logistics that still obviously need to be taken care of, it’s over.
I’m talking about the election being called in favor of Joe Biden. That’s over, at least as far as the market’s concerned.
Whether President Trump continues to challenge votes and contest results remains to be seen.
But as the results of the 2020 Presidential Election blow over and news of a potential successful vaccine candidate spreads, there’s much to look forward to.
Here’s what’s on my radar this week…