On a BUY ?…..or What ?

Feb 8, 2018

What I have been saying about interest rates and inflation versus earnings yields is coming true.

The market is adjusting to the fact that the Trump / Republican budget is a calculated gamble that the tax reduction in the face of increased spending will not cause inflation, increased government spending, and a higher national debt to be financed in the bond market via higher interest rates.

The SPY model says we are on a buy signal and it has been right 5 out of 6 times since 2000. The model says hold till the close February 28 and exit if the 200 day moving price average of SPY is higher than SPY at the close that day.

This is an across the board sell off, so the risk is not in stock picking. This is market risk, pure and simple.

I have allowed my emotions to overule the model and I am now 1/3 invested and  still acceptably profitable for the year to date.

The balance I wanted to find is to look forward to the market’s close each day in anticipation of the market climbing, even though I am only settling for 1/3 of what could have been.

On the other hand, if the market continues to sell off, I can console myself that I am only 1/3 invested and positioned to invest 2/3 of my investible funds at lower prices.

The Republicans and Trump are swinging for the fences, instead of slow and easy like Obama and his Federal Reserve.  I can tell you that a home run, or better yet, a Trump home run is far more satisfying to the Donald than a high on-base percentage.

This approach landed him in trouble in Atlantic City and it reached the point where no USA bank would lend him money because of his Chapter 11 bankruptcies.

Now he is carrying the enabling Republicans with him and together they are gambling with the full faith and credit of the United States.

It may very well be that Trump’s approach to borrowing as the self-described ” King of Debt ” is the dreaded black swan the market has long feared.

Richard Maurice Gore





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