04-03-2020: Settling Into the Saddle

One of the great things about riding a great horse is how you and the horse can settle into a smooth, almost magical oneness... where the horse and rider are in sync and you can just settle into the saddle and enjoy the ride. And, while it has been a while since I have had that wonderful experience, I'll never forget it. As I said... it's almost magical.


Rightly or wrongly, I have settled into the bear-market 'saddle'. Up-days are to be expected and simply ignored unless the up-day is so severe as to trigger our stop loss settings. Otherwise, it is just another day in the saddle as the horse (in this case) is the bear-market and it is (for the time-being) only headed in one direction... down.


How far down is anyone's guess, but it will not surprise me to see the market take out it's recent bottom and drop significantly lower. But, then there is the Trump-factor... One of these days when it looks like this lock-down will never end and our economy is teetering on the edge of the abyss (depression?), it will not surprise me to see Trump declare "the worst is behind us and while the all-clear has not sounded, it is time to get back to work"... or words to that extent. The market will boom (probably for a euphoric few weeks) until it comes to grips with the fact that there is no magic switch to flip that will instantly put our economy back on pre-February 24 footing; much less the rest of the world.


The people forecasting a U-shaped recovery could be right, but I think they are whistling past the graveyard. I suspect the market will bottom sooner than later, but will not shoot back higher. My guess (and it is a guess) is it will take months... maybe years for the economy to come back to where it was BC (BC = Before Coronavirus).


One of these days, the investing world will come to realize that solving the pandemic is not even half of the problem. The big problem is the RESTART. Our lives, our country, the entire world is facing the likelihood that we will never be the same BC. The paradigm is shifting and we do not know how far nor how significant that shift will be. The unknowns are huge and the unknown unknowns are likely even bigger.


So, here is where I am as we move into the weekend... In ULTRA-MAX (up +21% ytd, btw), I am 100% short the market in 2x inverse ETFs. Tactical Growth is 20% short in 1x inverse ETFs and 10% long in some amazing companies in the middle of producing a cure for the coronavirus.


Tomorrow afternoon, after my 1:00 pm (CDT) "Critical Update" webinar, I will be getting the first reports from our computer systems. I will decide, after reviewing the data, if I want to put more money to work on the short side or not in those strategies that are not fully invested. But, this much I know... nothing in the market changed this week to change the bear-trend. It is alive and well and trending down. I just have to decide how much more bearish I want my clients exposed to the market for this coming week.


Enjoy the weekend. Stay safe... do not quit being vigilant about avoiding the potential of getting infected.

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