Irrational Exuberance in Our Markets

November 24, 2021

Irrational Exuberance in Our Markets By Mitchell Anthony November 23, 2021   Alan Greenspan’s infamous speech in 1996 hit the nail on the head when he warned the world about the irrational exuberance that existed in both the US economy and US financial markets.  For the most part corporate leaders and investors failed to take heed of the notice until it was too late. The exuberance centered heavily on greedy blind ambition as well as ignorance that drove capital into Internet and tech oriented businesses that had far too optimistic visions for their products and product cycles.  Some had no products or services at all that were rational.  The exuberance caused these businesses to invest heavily in human capital that they had to divest quickly thereof when the bottom fell out at the end of that dot-com cycle in 2000. The fallout from the tech sector dominoed into other sectors and caused a classic economic bust that led to one of the worst equity market declines on record.  Similarly the economic strength from 2002-2007 that preceded the great recession of 2009, saw greedy blind ambition drive over-consumption in the housing market into a state of irrational exuberance that resulted in a massive economic bust that took a decade to put behind us. Equity Markets and Real Estate Assets have surged dramatically over the past two years, with everything from cryptocurrency to meme stocks exploding in value, causing investors to wonder about the existence of rot in our economy? Could we be on the verge of another bust for the economy and the markets?Read more

Lingering Headwinds from Covid

November 3, 2021

Lingering Headwinds from Covid By Mitchell Anthony November 3, 2021   Covid 19 has affected the lives of almost everyone on the globe for the last few years. Thousands of lives have been lost and the personal agendas of everyone on the planet have been altered. Global economies have been wrecked as businesses have had to stop and start because of the pandemic. Most mature businesses and industries survived and some have been big winners while others have been losers.  As we start to see the light at the end of the tunnel we seek to understand what the lingering economic effects from Covid 19 will be for years to come.  How will consumption be altered and how will production of goods and services be changed.  What industries and businesses have found tailwinds from this pandemic that will linger and enhance their outlook for years to come.  Conversely what businesses and industries have headwinds that are lingering and dampening their growth prospects.Read more

Markets Fret Over Fear of Change in Monetary Policy.

October 5, 2021

Markets Fret Over Fear of Change in Monetary Policy. October 5, 2021 by Mitchell Anthony   The relatively steady rise in equity prices that we experienced the last 1 ½ years has shown some signs of stalling over the last month. The S&P 500’s recent peak was on or about August 31.  It declined about 4% in the first week of September and then quickly recovered back to its August 31 high by September 22. However, commentary from the feds meeting the third week of September caused fear and investors pushed the market down again to where the S&P 500 is now about 6% below the August 31 high. We saw a similar correction like this in March of this year as well as November of last year.  When investors fear the economic cycle is ending they sell stocks and they tend to sell growth stocks first because of their high valuations.  As a result technology has underperformed over the last month and value areas like energy, materials, and financials have done better but still have declined over 2%. Steady economic data combined with accommodative monetary policy got the markets right back on course during these previous corrections.  Will this correction have the same outcome? We believe so, however we are carefully watching the inflationary environment as well as the dynamics going on in housing for confirmation of our thesis that this market is being driven by Fed liquidity and expectations for modest earnings growth. We believe the Fed’s liquidity pump will remain on for several more years, combined with a strong consumption theme of housing and business and consumer services.  We believe the US economy will ebb and flow with modest to moderate growth. Asset valuations will remain very high as rates stay near Zero.Read more

MACM Portfolios and Equity Indices descend a bit further on China Uncertainty and Tame Economic Data

September 21, 2021

MACM Portfolios and Equity Indices descend a bit further on China Uncertainty and Tame Economic Data By Mitchell Anthony September 20th, 2021   The equity market’s results last week were mixed as soft but tame economic data combined with further regulatory talk by Chinese officials brought concern to the US markets.  Investors seem to forget occasionally that soft economic data is much better than strong economic data.   The equity markets in America are highly valued and some say ripe for a correction given the right economic event.  Thus far the economic environment has been benign with very accommodative central bank policy and an outlook for modest to moderate economic growth.  The inflation numbers were a bit hot but now are calming just as the Fed had predicted.  This is nirvana for equity markets.  As a result we have highly valued markets that are likely to stay highly valued and tilt higher until the economy stumbles badly.Read more

Markets flat last week but MACM Portfolios Advance!

September 8, 2021

Markets flat last week but MACM Portfolios Advance! By Mitchell Anthony September 7th, 2021   We had another solid week for MACM portfolios last week. MACM’s dynamic growth portfolio (DG) advanced 0.72% compared to flat returns (0.18%) for the S&P 500.  Recent additions to the portfolio continued for the second straight week to lead the advance with China (CHIQ) returning 2.5% last week.  The FAANG stocks which are heavy in our DG portfolio, had another week of gains advancing approximately 1.10% in total.  FB -1.16%, AMZN +1.65%, AAPL +0.77%, NFLX +4.3%, GOOGL -0.59%.  Investors weighed the corporate news flow and economic reports  and found no compelling reasons to favor Value or Growth with both arena’s up modestly for the week.  We likewise were quiet last week with no major changes to the portfolio based upon news flow.  Large Cap growth IWF +0.33% and Large Cap Value IWD + 0.20%.  The Tech Heavy Nasdaq QQQ advanced 0.34%.Read more