Market Notes

December 5, 2018


Do you remember 1972?

This was the year that

  •  White House "plumbers" first break in at the Democratic National Headquarters at Watergate Complex in Washington D.C.

  •  TV comedy M*A*S*H, adapted from the movie, starring Alan Alda, Loretta Swit and Wayne Rogers debuts on CBS in the US

  • "The Godfather", based on the book by Mario Puzo, directed by Francis Ford Coppola and starring Marlon Brando and Al Pacino, premieres in NYC (Academy Awards Best Picture 1973)

  • David Bowie releases his breakthrough album "The Rise & Fall of Ziggy Stardust and the Spiders from Mars"

  • "Honky Chateau" becomes Elton John's first No. 1 album in the US, includes hit "Rocket Man"


According to Bloomberg, 2018 is the “Worst Year to Make Money in the Markets Since 1972…

I alluded to this in my last blog. We also posted our monthly “Market Pulse” earlier today, which shows a similar theme. It’s rough out there.

Our portfolios are weathering the storm as well as could be expected due to having set aside cash across the board in September and adding to it throughout October and November. We have been getting increasingly cautious all year long – which has served our clients well.

We want to point out that we are almost always cautiously “bullish/bearish” – and never recklessly so. Our posts, trades and position over the year 2018 so far, illustrates the idea that you don’t need to be “all-in” or “all out” of the market – and you probably shouldn’t be. We don’t ever hear serious investors talking about investing 100% in anything. There are always businesses that you want to own a piece of, no matter what the geopolitical situation. For this reason and others, I don’t think one can look at our portfolios and call them bullish or bearish – they are collections of productive businesses and investment vehicles. Some are extremely bullish bets on American industry, and others are investments in physical gold and silver which are decidedly bearish investments. And then there is our cash hoard – which we love very much.

Anyone who invests in markets long enough is going experience both bull markets and bear markets – we think serious investors should prepare for both.

But here is the big takeaway: if you can’t emotionally handle a 5%, 10% or even 20% drop in short order with the money that you have invested in stocks – then you shouldn’t invest that (much) money in stocks. Period. But, skipping stocks means you will miss out on the best long-term wealth-building tool in all of capitalism.

Remember, we don’t have to be all-in or all out. Timing the market simply means investing a little more aggressively when the economics are set up in our favor and investing a little more conservatively when the odds are against us. It does not involve predictions of any kind. Its all about statistics, odds and probabilities. With conservative investments (including cash) you can take larger position sizes, and with more speculative investments you should maintain smaller positions.

Many folks are nervous out there today. Don’t be. It doesn’t do you any good. If you are concerned about your long-term plan with regard for the short-term volatility in markets, please give us a call so we can help you find alternative solutions. There are great alternative investments available that don’t expose you to any of the downside of the stock market and these may be a great fit for a portion of your portfolio. This is a great example of why we love being a fiduciary and having our own firm – our loyalty is to you, our client – and no product, stock, or company.

In the final month of 2018 I encourage you to consider your long-term financial plan – not only your investment objectives but also your family’s balance sheet, assets, debt levels and income & expense projections – and assign every dollar a job description that will get you to where you want to go.

The market is a tool to be exploited not a master to be served.


Shane Fleury, CIO

Elevate Capital Advisors

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