September 5, 2018
I can hardly believe it is September, already. Into the “r-months” we go, riding high on our cautious bull… boy, these markets are resilient.
Since I last wrote, the value of a dollar (or donut) has fallen (based on the “dollar-index”) from about 97, down to 95(ish).
That may not sound like much in the days of Bitcoins and smart-contracts, but if I told you that the cash in your bank account (or in your mattress) decreased in value by 2.73% in about 14 days (from 8/15-8/29), after going up 2% in the prior 2 weeks, you might have any one of many reactions… Most people see this as their “safety”, and nothing “safe” is supposed to move by that much in such a short time-frame. What bank accounts are safe from is markets – what they are not safe from is the “banksters”.
The perceived safety of the dollars in the bank is just that – perceived. At any time there could (and probably will) occur a “crisis of confidence”, as I have heard it termed. You can see a real-life, real-time example of this in Venezuela right now. Terrifying. Perhaps at that time folks will demand something other than dollars in exchange for their goods and services. Bitcoin anyone?
I wouldn’t bet against Bitcoin, but I’d place a larger wager on gold – which has been a reliable store of value of thousands of years (even at the bottom of the sea).
That said, digital assets – including cryptocurrencies – are likely to survive in some form or fashion, whether Bitcoin and it’s “1st generation” brethren do, or not. In much the same way that the internet survived the “dotcom bubble”. This is a highly speculative area of the market, and not for the faint of heart. If you are interested in speculating in this market, and you are a Qualified Purchaser as defined by SEC, please get in touch with me here.
Meanwhile, major market indices have mostly broken out to and then retreated from all-time highs, besting the marks set earlier this year.
In the very-short-term the trend is down and we still see risk of a similar event to the pullback earlier this year, but the old high will act as some support.
If that holds, it could be the basis for a meaningful run higher through the “r-months”.
We are staying long, staying hedged and maintaining a healthy allocation to cash to take advantage of opportunities that will no-doubt arise along the way – no matter which way we go.
Shane Fleury, CIO
Elevate Capital Advisors
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