Before the bulls dump a cement mixer full of concrete onto the lurid bearish arguments being carelessly bandied about since 2019 kicked off, it's time to review optimal portfolio positioning moving forward.
To be clear, apart from the frustrating short-term fluctuations that have more than achieved the markets intent to fry the brains of participants, the 2900 range we have been fluctuating in for some months now is as good a buying opportunity as late-December when Zenolytics was begging investors to load up on technology while ALL of Wall Street was purchasing a permanent plot in the market cemetery for the current secular bull market.
Let's review what has happened in 2019:
- The S&P is up 20%
- The SOX is up 40%
- Home construction etf ITB is up 46%
- QE4 has kicked off, meaning that the Fed has the markets back in a big way and it's not planning on backing off
- Long-term rates are as accommodative as when QE1 kicked off in 2009
- The S&P has been consolidating near all-time highs in as a brilliant a bullish range as possible
- Pessimism by some measures is the same as during the 2008/2009 crisis
- Money markets are at record cash levels, meaning there are latent bids galore out there that will come into the market with each successive new high
All the meanwhile, the favorite topic remains recession and all the rubbish arguments that have accompanied recessionary fervor since the middle of last year. That's right....nearly 18 months of recessionary arguments. All the meanwhile the markets are cow tipping their way up to new highs, telling investors a completely contradictory story to what the media and a majority of Wall Street analysts are selling.
You can take advantage of a market that is screaming from rooftops to embrace market risk in two ways:
- Sell short safe haven assets, including bonds (we are short), gold (we are short), bitcoin, consumer defensive sectors
- Go long risk: Semis (we are long), SaaS (we are long), banks (we are long), anything having to do with a mortgage (we are long), anything having to do with building a house, anything having to do with non-recessionary prosperity
Positioning for Q4 is simply a matter of allocating away from consensus, media and institutional led fear into what has been and will continue to work in 2019 and well beyond.
