What a start to the new year! A rollercoaster ride in market sentiment with everyone reeling from the portfolio destruction in Q4 2018 to finally the relief that the Fed is putting QT on hold.
Over the first few weeks of Jan, most companies confirmed what was already expected. A slowdown in expected revenues and earnings for the coming year. Of course, that doesn’t stop investors from cheering on and piling back in when the low bar is stepped over in the “adjusted” numbers reported for past quarter (I’m referring to you, Apple stock permabulls). Various companies from almost all sectors of the economy have lowered revenue and earnings guidance for 2019 — many of them blaming the trade war, but the reality is probably more to do with the business cycle than anything.
The big news in January was of course the Fed caving in what was a widely expected move. After a lot of humming and haahing, the Fed officials finally acknowledged that this market will not tolerate higher interest rates — so much for a strong and solid economy.
At the expense of sounding like a permabear, the Fed always does this (“just a pause”) before recessions after stoking asset bubbles.
With this acknowledgement from the Fed, everything (stocks, bonds, real estate, gold etc) seems to be doing really well — atleast in the first couple of days since the announcement on Wednesday.
But the big clue remains in how the gold market is performing as the mainstream asset managers have finally realized the importance of the “pet rock”.
Both the gold bullion and gold mining companies have seen immense reinvigoration in prices after being depressed for years. The following quote rings true and all gold bulls (including yours truly) will smilingly acknowledge as we take a victory lap 🙂
“Successful investing is having everyone agree with you………..later.”-Jim Grant
Outlook for February 2019
Not too much to do for my portfolio since I am already well positioned for this playbook to unfold. I have started taking some profits in the gold miners (to avoid overexposure to one company) and deployed capital elsewhere that I think will be relatively safe & stable going forward.
Meanwhile, I also continue researching investment opportunities that are outside the community’s focus either due to cyclical nature or simply because of fear mongering. It’s still early days and I need to form a better opinion before commenting on these sectors/stocks where I see value, but keep your eyes peeled on this blog and my Twitter feed.
As of Jan 31, 2019 our portfolio is diversified as shown below.
Looking for investment ideas? Check out this Top Investment Picks for 2019, where 30+ investors present their top pick and a reason to invest in those securities.
What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.
Full Disclosure: Our full list of holdings is available here.