Posts Tagged ‘time to sell’

Be Prepared

February 24th, 2021 by Kurt L. Smith

The past week has been a tragedy down here in Texas. One crisis morphed into another leaving dozens dead and tens of billions in destruction. Simply terrible and preventable.

As a Texas native, ridiculously cold weather for a ridiculously long (for us) time is not a once in a century experience. Every decade or so it happens. But Texans are not all native Texans now (or ever). Texas has been growing by transplants forever and their expectations eventually collide with a horrible reality.

A gardener prepares his garden in the winter. A homeowner prepares her pipes before they freeze. An investor prepares for the downturn as the market moves higher. There is time for celebration but there is also time for work, the preparation what comes next.

Last month we focused on the ten-year Treasury note and long bond. Friday, February 19th, those sold at new low prices (high yields). The long Treasury bonds has now lost 35 points in value from March 9, 2020 at 140.17+ to 105.05+ Friday (all prices from Bloomberg). One of the recently sold ten-year Treasury notes, the .625% of August 15, 2030, has now lost more in price that it ever promised to pay investors in interest over its ten-year life, trading at 93.6875.

These treasuries are, of course, the favorite investment for the Federal Reserve Bank. Their appetite for all treasury securities has grown on their balance sheet from about $2.5 trillion a year ago to $4.8 trillion now (per Bloomberg). All the while, their price continues to fall.

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The Bigger Picture

October 15th, 2019 by Kurt L. Smith

Summer was extended down here in Dallas. Ninety-plus degree days almost every day in September. Seemingly the same thing every day, like the markets these past many months. Change will happen, though it seemingly hasn’t yet.

When we drew our line in the sand, almost two years ago, that the next move for stocks would be down, little did we know how long the wait might be. Obviously I stand by my call because I bring it up often. More importantly it still holds up well. What have you missed in stocks?

But if you haven’t sold some of your stocks you haven’t built up your cash and you haven’t increased your commitment to The Select Approach^TM. Unlike every other investor, you have The Select Approach^TM as an alternative to stocks, bonds, gold, commodities, real estate, private equity and whatever other mash up you may or may not have tried.

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Rates Rise; Who Cares?

March 8th, 2017 by Kurt L. Smith

These are heady times in the stock market. As market indexes set historical all-time highs, who cares about bonds? Stocks are all the buzz.

Back in August my letter was First Bonds, Now Stocks. “If you liked the bond market rally this year, then I think you will really enjoy the stock market rally which appears to be gathering steam.” Gather it has. The Dow Jones Industrial Average traded at 17,063 on June 27^th, 2016; on March 1^st, 2017 it was 21,169 for a 24% rise.

Meanwhile the bubble on Bonds did indeed burst as ten year Treasury yields bottomed at 1.32% on July 6, 2016, before doubling to 2.64% on December 15^th. So while stocks were gaining steam, bond prices were indeed weakening as yields doubled. As the Dow rallied, ten year Treasury bonds sank, producing an 11% price loss into the December yield highs. The long bellwether Treasury bond was down 22% in price over the same period.

Both the rise in stock prices and the fall in Bond prices were expected. After bond prices bottomed in December we expected prices to bounce and indeed the bounce appears to be over such that prices are trending lower again as the yield on the ten year treasury is back over 2.50%.

January’s Letter, Lines In the Sand noted Big Bill Gross’s line at 2.60% for the ten year treasury. At just over 2.50% as March begins, we are within striking distance. (more…)

Another Step Closer

March 3rd, 2016 by Kurt L. Smith

Markets go up and markets go down. We all know this. We should also know that we are fortunate to live in an era in which markets have trended higher for decades. Unfortunately we now live in an age of asset bubbles with the largest bubbles of all, Stocks and Bonds, on the verge of a massive popping.

We have watched the popping of two asset bubbles over the past several years: According to Bloomberg, Precious Metals (Gold & Silver) and Oil. Gold peaked in September 2011 at $1920 an ounce, falling 45% over the following four years to a $1046 low. Silver almost touched $50 an ounce for the second time in its history and sold off to below $14. Oil peaked at $147 in 2008 but sold at $107 just nineteen months ago and below $27 last month. Markets do go up and down, but in today’s age of asset bubbles, one must be ever mindful of the tremendous downside risks that exist. (more…)

Greece, China and Puerto Rico, Oh My!

July 22nd, 2015 by Kurt L. Smith

The mile markers continue to move on by. Kicking the can down the road appears to be running out of steam and now people are truly being hurt as real losses are now affecting millions of people. (more…)

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