Year-to-Date Strategy Stats as of today:
+ 38.89% : Turner Quant Advantage (TQA)
+ 13.58% : Tactical Growth (TG)
+ 2.51% : Diversified Income (DIS)
+ 18.25% : Leveraged Index (LI)
+ 6.94% : S&P 500
This week started out on a fairly positive note and the market continued its upward trend. While risk was still very high, there was enough positive trend data to support putting some capital to work in our most risk aggressive strategy, TQA (Turner Quant Advantage). But, when the market began turning around yesterday, I took that model back to 100% cash. That cost us a little, but that model is still up almost 39% year-to-date. Now, all models are 100% cash except the Diversified Income Strategy, which is not as sensitive to the trends of the major indexes as our more growth-oriented portfolios are. Still... my plan is to move that model to cash either today or tomorrow.
And, as I have been promising you for several weeks, this is the "move to cash" condition that I said I would execute prior to the presidential election. From this point until at least November 4, we will remain in cash.
This morning looks to be more confirmation that the market does not see a so-called stimulus bill coming out of Congress before the election. I am going to do my best to stay away from telling you what I really think about the despicable actions of one side of the aisle; especially in this 'cancel-culture' world that we live in. After all, I do not know the political leanings of each of my clients and the last thing I want to do is to express an opinion that would alienate anyone. But... (here goes)... for the life of me, I cannot understand why Congress is not backstopping the financial destruction of millions of individuals and small businesses. It appears to me to be nothing short of the desire of one side to gain ultimate power over the other side and to hell with the seriously hurting people that they, purportedly, represent. Ultimate power corrupts ultimately and from what I see, too many in Washington are no longer working for and by the people, but working for and by their own personal, power-hungry, representation.
You know that I am not a big fan of bail-outs; especially, bail-outs of people and businesses due to their own poor choices and/or management. But, this pandemic is not of anyone's choosing and there is no better time for the government to step up to the plate than in this dire situation; dire for so many small business that are facing total destruction of a lifetime of work to build an income for their family and employees.
Allow me to share a personal story with you that epitomizes the condition of so many small businesses: This week, Sue and I had lunch at a local small restaurant. The owner is a friend of ours. He came over to our table to say hi and I asked him how he is doing with most of his tables taped off and so few people eating out during this still semi-shut down world. He said he was not doing well at all. He said the only way to keep his business going is to be fully open and with more than half of his floor space unavailable for diners, his cash-flow was not covering his operational costs... not even close. He further went on to say that if some kind of relief did not come out of Congress before the end of this October, he would have to close the doors forever, else face bankruptcy, which might happen anyway. He went on to say that a year ago, he was looking to sell his business for $200,000 but today he would take $20,000 just to keep his staff employed. I suspect, based on his demeaner that he would take far less than $20,000 at this point. It really is a sad situation. His business has been an icon for many years and a wonderful place for a quick and delicious lunch or dinner. This business is unique and when it is gone, that uniqueness will be gone for all of us. This is why I am so disgusted with what is going on in the House of Representatives right now.
I have seen some despicable people in my life, but there are a handful (and oh, how I would like to name names) in Washington that epitomize the term. How those people can continue to be reelected is an enigma to me.
It appears to me that no deal will be reached in Congress regarding financial relief for millions of Americans (the voters) in order to have them as disgruntled with the current administration as possible with the upcoming election. As pathetic as that strategy is, it is nevertheless, what appears (to me) to be the case.
I hope I am wrong, but it looks to me that our great country is at a tipping point, financially. If the end of this month comes with no financial relief coming out of Washington and if I am right that a slew of bankruptcies will erupt as of November 1, a post-election relief bill may be too little, too late. If (and that is a big if) that is true, then regardless of who wins the presidency for the next four years may see a cascading domino effect with massive numbers of bankruptcies, massive employment losses, and the potential of massive increases of COVID-19 cases before a vaccine can be distributed. The wheels could, literally, fall off of this economy and the market.
If that occurs, we will be moving into the market with inverse ETFs to capitalize on a falling stock market. None of us want to see the economy tank. None of us want to see an epidemic of bankruptcies occur. None of us want to see millions of people out of work and family businesses closing their doors forever. And, none of us want to lose our life's accumulated investment wealth in a bear market. The silver lining is this: Inverse ETFs will soar higher in a bear market and my goal is to get us into those ETFs as soon as the data confirm that a bear market is in play. I will not guess that all of these horrible events will occur and that a bear market is inevitable. But, I do have a plan already in place if the events described above do come to pass.
Let's hope for a continued V-shaped recovery, the likes of which has never been seen. But, let's also be prepared just in case the opposite occurs. We are prepared; and your capital is currently sitting nicely in cash, waiting to see how the future unfolds... it is only a couple of weeks away.