Greetings, salutations and a happy happy new year. Looks like we are off to quite a newsy start. As we came into the new year, we had a couple of important thoughts. But first, as you know, we are quite opinionated on the state of our government, both sides of the aisle, too many tweets, too much debt, gigantic deficits and all that crap. And now we have this Iran thing. We will have more written thoughts in the days ahead but one can always tune into the radio show Mon-Fri 6:05 pm et. If not in your city and if you cannot listen live, just go to garyk.com as it is archived soon after.
Our thoughts on what is going on geo-politically:
We will first state it in a form of a question. Have you ever seen more people so upset, so depressed, so down in the mouth about a dead terrorist who murdered Americans, murdered Muslims, murdered his own people who were protesting, raped women, plundered, tortured, paid off other terrorists, just engineered an attack on an American embassy that if not for security, more people would have been murdered, engineered dozens of recent attacks…and whatever else we do not know about? Seriously? You don’t believe us? Just turn on a couple of the networks. (You know which ones!) Then shut the sound off and just look at them. Just watch their expressions. You don’t even need to listen to their words. That’s all. You’ll get it quickly. As far as politicians…it’s just politics. The same people who did cartwheels and gave standing ovations when Bin Laden was taken out are now calling this an act of war because the scumbag had a title and that Bid Laden wasn’t part of the government. Last we looked, a terrorist with a government title is still a terrorist. This does not mean we are not worried and it does not mean we even agree. The fact is we don’t trust a certain person’s tweets and we are not so sure of a certain person’s judgement but arguably, one of the worst people (use that word loosely) walking the face of this earth is now toast. So why are so many so depressed?
AND as we entered the new year, we had two thoughts on the market. 1) The market was about as strong as we have seen in a long while. We had told you since Powell started the “NOT QE” in early October that there was a chance of a strong rally into the end of the year because of the combination of seasonality, loads of cash on the sideline and the “NOT QE!” We got it. 2) Sentiment entering the new year was waaaaaay off the charts bullish. Simply put, when everyone is bullish, it is usually getting close to a pullback/correction. It does not have to happen immediately but in our last report of the year, we told you it was getting close. The market just needed a catalyst. We got the catalyst.
We have no clue if this is just a normal correction or something more. We will get a good feel as we move forward. Keep in mind, corrections are just fine. The market, after all, was way overdue. After all, the market was stretched and extended to the upside. After all, last year’s returns were equivalent to 3+ years of normal returns. Corrections wipe the smiles off the face of the bulls. Corrections put doubt in the markets. Corrections embolden the bears. Eventual higher prices need this movement from greed to fear. Of course, markets have a lot on their table now. Major global uncertainty now fills the air. It matters. Talk of World War 3 is coming out of a few jackass pundits that have nothing better to do than make themselves noticed. But this does affect markets. We suspect if tensions remain, if attacks continue, if not so smart tweets are sent out, markets will be affected. Oil can continue to spike. (not good) Investors would look to safe havens of treasuries or gold. Risk appetite would be stifled. The good news is that we have only one down day off the highs…but the bad news is that we have only one down day off the highs. The good news is there is still a ton of leadership in the all-important TECHNOLOGY and FINANCIAL areas. The bad news is they can come after them quickly.
But hey…have a happy happy new year. We think it is still WE THE PEOPLE!