Rambling Post

2021 is going to be an interesting year. For various reasons, I guess we could start with the Federal Reserves balance sheet hitting record highs. Listed below.

A lot of people underestimated the power of the Central Banks. To me, this is sort of distorting the forward multiples on the S&P 500 for 2021. I think what we are about to see, is somewhat of a "melt up", but not some euphoric melt up. I think it will be a pretty steady 2021, with a few corrections. "Everyone is a genius in a bull market". Yes, Central banks are buying $80b a month in Treasuries, and $40b a month in MBS's. That does NOT mean we cannot have a nice 15-20% pullback in my opinion. In fact, I think I would place (totally arbitrary) my bets on a possible 10% correction in the next 3 months.

Essentially, from the most recent Fed meeting, they plan to provide open-ended stimulus to spur recovery. We need to think about this from a level headed approach, not get excited, and stick to our discipline of buying quality businesses. What I believe will happen, is the Fed will back off once the COVID cases and deaths start to dwindle down. People will start to go back to work, economy will open up. What does this tell me? This could very well be a "sell the news" type event, which would lead to a buying opportunity for us. The Fed may wait a few months before they start to wean off the drug of injecting liquidity. More workers are seeking unemployment benefits as well, at a three-month high. That to me, is not good, but wait there is more! Our government is trying to pass a stimulus bill (that will hype the market up) and give you another $1200! $1200, thats the best the government can come up with.

What worries me is EVERYONE I know is up this year, not just "up", I mean... up 60, 70, 80% YTD. That is not normal, some who have never even invested before is up 200%. YTD returns are nice, but the CAGR is what I am focused on in the long haul.

I see to much trading going on. New investors are following momentum stocks, not fully understanding what they are buying. I think that sort of mindset is dangerous to building wealth, I love trading dont get me wrong, but I am very careful how I go about it.

Take a look down below, the spread between Growth and Value. I utilize Ed Yardeni's website, it is jam packed with extremely useful data that I utilize to make long-term investment decisions.

You can see exactly where the rotation started to happen, while I think it could continue, I have my ZBRA as my "value" play.

I guess my bottom line, and takeaway from this post is that everyone should ignore the noise, and stick to your thesis. Our names have been smooth sailing so far, I am not complacent and I never will be. I could spit off 50 different risks I see in the market right now, one being the Senate run off in Georgia. I think the market priced gridlock in, for a Republican win. IF that does not happen, I think markets could pullback slightly on a Democrat House and Senate. I do not get political on this page, but that is just what I think.

As an investor you should always be worried, the second you stop worrying, the market will take you and throw you into traffic.

Here is an update on my current holdings, simple news.

Cloudflare: Promotes Michelle Zatlyn to President, a gain for women in tech. This is huge in my opinion, one because Michelle is awesome, and two she has seen so many different roles through her career that she has gained my confidence she can oversee sales, customer support, special projects, communications and human resources (Phew)..

BlackLine: Literally nothing fundamental, the stock just keeps grinding higher (my thesis is playing out....)

Lemonade: Launched in France, Life Insurance should be coming soon. Looks like shorts are getting ripped apart from 35% outstanding share short, down to 9%. Probably more room to run. Valuation is very high for this company, they MUST deliver in 2021. Really impress me.

Zebra: Got a few nice upgrades, but I dont care about Wall Street

Anaplan: Nothing exciting here, but has been steady. I believe my next post will be more thought provoking on Anaplan as I may build a bigger position in 2021.

Thanks for reading, I just had some ideas flowing and figured I would sit down and put them in a post real quick.

I ended up buying a new book.. 'The Psychology of Money'. Plan to read it, take notes, nd obviously write a post. :)

Happy Investing,


References & Reads







131 views0 comments

Recent Posts

See All