Those Anecdotal Data Points, You Know?
As we blaze through the first month of a new year filled with equal parts angst and optimism, there seems to be very little that will dull the appetite of investors for speculation in nearly anything with the perception of value. Be it sports memorabilia, commodities, vintage goods or stocks, if it fluctuates in value, then odds are there is appetite for it. Anything works, except for holding onto eroding wads of cash that serve no purpose other than incremental depletion of value on a seemingly perpetual basis. In the midst of this celebration of crisis era capitalism, brought on by seismic shifts in the economic landscape of the past century, anecdotal data points continue to appear that suggest the fondness for speculation may have crossed the line from holy into unholy grounds that threaten to unleash the oversized fists of the market gods, causing tremors that few are prepared for. Now lets me first explain that while the theme of this note may seem generally bearish in tone, as an investor, you very simply cannot buck the present bullish trend. What I am attempting to express here is that the comfort with which most are approaching this market, as expressed through leverage in its various forms, will lead to a period of exhausting volatility, be it short lived or otherwise. The violent nature of this market suggests that investors should be looking for evidence of such an event, as it will be the key to outperforming both the markets and peers in 2021. In other words, unlike 2020, 2021 will not be a year where you can simply grab nuts and buy whatever is going up. There will be consequences for acts of juvenile barbarism that few are prepared to face. In 2021, thus far, I have received numerous inquires that go something like this: My god, my friends are making so much money in the markets. I cannot sit this out any longer. What's the best way to get involved? This one was an insta-classic: My 10 year old wants to start trading options, what brokerage firm do you suggest for him? And then there are the more refined individuals who simply ask for advice on recent IPOs that they have no idea about, but like the symbol or the fact that it trades in the triple digits right off the bat. While anecdotal data often times is early in nature, in this circumstance, use it as a means of refraining from grabbing both of your nuts while you dive into the most high octane driven stocks, perhaps instead choosing to only grab one, while you shield...
Themes For 2021 and Beyond Are Emerging Early On
What if the virus crisis and the resulting global response, in terms of ongoing fiscal and monetary stimulus, was such an outlier, with such significant force, that it effectively reset the lifecycle of the economic expansion back to what is essentially 2010 again? What if the fiscal and monetary response are not just meant to stimulate the economy from a demand standpoint, but to actually destroy cash as an asset class in order to force asset prices to levels that will boggle the mind, while creating economic benefits that create the foundation for inflation led, government induced prosperity? What if $500 billion, trillion and $2 trillion dollar market caps are just the beginning rather than any conceivable end? If cash as an asset class is on its way to oblivion then the entire investment ecosystem of 5-10 years from now is an unrecognizable leviathan compared to where we are presently. It involves the complete economic destruction of anybody who does not possess investable assets that are deployed aggressively, preferably with leverage. It involves the restructuring of corporate balance sheets away from cash, into asset classes, whether stocks, precious metals or cryptos, that preserve the value of corporate earnings. This is a very raw concept presently because it is so early on. The eventual winners of this new age of the annihilation of cash as an asset class will shift multiple times over the next decade. What is absolutely certain is that all of those times that you heard "cash on sidelines is coming into the market" is no longer just a headline but an absolute force of nature. Global governments are destroying cash as an asset class because it's the only means of insuring an inflationary outcome that will then allow for any semblance of an unwind of stimulus over the long-term. If the first several days are any indication, 2021 is gonna be on another level completely. Zenolytics now offers Turning Points Market Intelligence premium service Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons...
Weekly Note Preview: 2021 Offers Investors Multiple Avenues To Outperform, But Those Avenues Will Be Much Different Than What 2020 Offered
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. What follows is an excerpt from this weekend's 180th Edition of Zenolytics Turning Points: MARKET UPDATE With the new year comes the tradition of forecasts for the year ahead that are typically based on both recent past performance and some measure of distant historical precedent. While many are attempting to handicap 2021, to do so demonstrates either a certain degree of arrogance or ignorance as we are moving into a terrain that is alien to all of us. What has occurred since the virus crisis in March and the resulting massive stimulus measures, whether fiscal or monetary, has been an acceleration of dynamics that should have taken 5-10 years to properly prepare for and digest. This has forced a great amount of stress on both societies and economies globally. We are seeing that stress expressed through the great amount of social unrest, mostly aimed at governments, whether with respect to economic inequality or lock down measures that are seen as unnecessary or abusive in nature. We are also seeing that stress expressed through massive volatility across numerous asset classes that have primarily taken the direction of upside in everything from small-cap stocks, cryptos and even sports memorabilia is seeing values inflate as endless amounts of capital seek a home away from cash. This stress induced appreciation of asset prices, forced by what is essentially the destruction of cash as an asset class, is a volatility enhancing event. “Volatility enhancing” is likely not a powerful enough term to properly classify what is occurring presently, however. What we have seen occur in asset prices, induced by governments being forced to destroy their monetary base, is the beginning of a volatility explosion that will be both deceptive and ultimately, destructive in nature. The only forecast for 2021 that has any chance of being accurate then is that it will be a year where the forces of volatility will become even pronounced, taking the form of both upside and downside volatility that can be potentially historic in nature. Our job as investors is to first and foremost, protect capital in such an environment. And secondly, to capitalize on this volatility to the best of our ability. To view the entirety of this weekend's note, you can subscribe by clicking here. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation,...