April 25, 2020
What a week for the oil markets. Have you ever been in that situation where a recently flushed toilet just keeps flowing and flowing as you desperately look for a way out of what could be a very bad situation? Oil traders had that feeling all week, especially on Tuesday, when the futures market actually went negative in a big way, closing at -$38 dollars a barrel. As the world shut down continues and oil continues to flow, there is now nowhere to put it. This just another dramatic example of the unintended consequences to our economy by literally shutting us all at home. Negative oil, negative interest rates, record unemployment, what next? Actually, this will be the first year in history where social security benefit payments will outstrip social security tax revenue. We all need to do our best to get the economy back up and running, as each day is more important than the previous. “We got no food, we got no jobs, our pets heads are falling off…”
April 7, 2020
This week could be the nastiest days of the world war with the coronavirus. Our thoughts and prayers go out to everyone impacted or on the front lines. America is coming together to do our parts in so many different ways and that should give everyone confidence that we will come out even better on the other side of this. Hang in there. It might not be tonight, tomorrow, or the next day, but everything’s gonna be okay.
March 27, 2020
Greetings Fellow Dollar Investment Club Members: I wanted to take some time and give you some thoughts and hopefully some perspective on the recent historic events impacting our daily lives. Five weeks ago, before the words Corona (other than beer), social distancing, and the CDC were part of every conversation, the markets were at all-time highs. In the most rapid descent ever, stocks at their worst were down about 38% from those same highs as the highly infectious and deadly Covid-19 virus has run through more than 150 countries. It is a scary and unprecedented time for everyone. And how did Dollar Investment Club Members respond? Last week, amid the shocking market disruption, we opened a RECORD number of new member accounts in one day alone. I was not only very pleasantly surprised, but also totally reinvigorated with the investment process. We understand that investing in great companies today, even in turbulent times, means that we have invested in great companies for the future, but at much lower prices. We understand that time in the market is much more powerful than trying to “time” the market. Finally, taking a systematic approach to investing, disciplined buying on a monthly basis, helps us “flatten” the risk curve and to invest when everyone else is selling. Going forward, our absolute primary concern is the health and safety of everyone around the world. We urge you to support all efforts to control this pandemic, we all need to do our part. As for investing, it is going to continue to be a volatile period as the world economy has never been suspended for this length of time and timing is the key. The longer the shutdown persists, the more long-term damage is done to our economy. With all this uncertainty, I am certain of […]
March 26, 2020
Markets have been relentlessly falling as the virus news worsens just like they said it would. The talking heads all pretend like they know how this plays out, but unfortunately when it comes to black swans the outcomes are unknowable. Our best guess is that great companies today, with iron clad balance sheets and strong brands, will be great companies when we come out of the other side of this. What might really get us out of this jam may be the 700 million babies that will be born, oh…in about 9 months from now. Now that is the way to stimulate the economy! Hang in there everyone and be safe.
February 18, 2020
According to BofA research, almost $24 billion of inflows went into bond funds for the seven day period ending 2-12-20. This represents the most net inflows since 2001 and has traders scratching their heads. Taken a step further, 30 year US government paper booked its lowest yield ever of 2.061%. There is now quiet talk of a huge bubble in the bond market as record assets flow into the lowest yields of our time. As for stocks, the bull keeps charging, even with a relatively small by comparison inflow into stock funds of just $8 billion in all of 2019. Imagine if that bond flow became stock flow? Grab your chair when the music stops.