Contrarian, Growth At A Reasonable Price, Macro
Contributor Since 2010
MPORTANT DISCLAIMER: Martin is not a Registered Investment Advisor, Broker/Dealer, Securities Broker or Financial Planner. The Information on SeekingAlpha.com or elsewhere is provided for information purposes only. The Information is not intended to be and does not constitute financial advice or any other advice, is general in nature and not specific to any individual. Before using Martin's information to make an investment decision, you should seek the advice of a qualified and registered securities professional and undertake your own due diligence. None of the information provided by Martin is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund. Martin is not responsible for any investment decision made by you. You are responsible for your own investment research and investment decisions.
I don't waste time predicting the timing or the exact method of the next crash. But if I had to make a guess, markets can stay irrational much longer that we can stay solvent. Almost by definition, markets have to crash when most people are bullish and not expecting the crash.
There are still plenty of bearish crash articles, so the bull has no other choice but to run higher. I also think there will be one last massive panic buying squeeze when truly every mom and pop investor realizes that the states around the world through coordinated central bank policies of negative interest rates, try to redistribute wealth and savings.
Because other ways have failed or are impossible: raising taxes is a political suicide, so no party will propose that really. Trying to inflate the debts and inequality away stealthily every year through reasonable inflation has failed, precisely because when people sense someone is trying to instill inflation and have low future visibility about jobs prospects and retirement benefits level, people naturally get cautious and defensive, causing deflation and more cash hoarding.
When this cash hoard truly starts to move from fixed income investments due to even more negative interest rates, that will be the time to sell bonds (or perhaps too late:)) but keep stocks as some of the money will move to higher yielding assets such as stocks, some to real estate, some to physical gold and most just to cash, depending on whether there will be a risk-on or risk-off environment.
I am trying to position my portfolio in a more or less market neutral way, combining independent long and short equity positions as well as trying to hedge other factors, such as inflation and risk on/off). However, I am keeping an overall long market exposure and even own some U.S. Treasury (TLT) as they are some of the best paying government debt in the world when adjusted for risk. I even own the high yielding, relatively short duration but high risk junk bonds (JNK) as I believe this is one area where the final rush for yield may be directed. I keep buying tiny physical gold exposure as an insurance.
Disclosure: The author is long TLT, JNK, GLD.