Market Might Finally Be Ready To Throw A Hissy Fit For Stimulus

I like to focus on individual stock ideas, finding the most Revolutionary companies on the planet when their valuations are compelling. Frankly though, the results have long spoken for themselves as our 10-100+ baggers have continued to pile up.

Perhaps our quietest 20-bagger ever is Solar Edge, which has been a volatile stock along since bought it at $14 per share four years ago, but has clearly the volatility over the short-term time frames has been meaningless to its long-term move to $300+ per share. I am still long Solar Edge although in the hedge fund I’m looking to hedge it with some puts/shorts on some other solar stocks that have been on fire lately but are not as Revolutionary as SEDG. Maybe some FSLR, JKS and ENPH puts 0-15% out of the money and dated out to November or something along those lines. As always when we hedge, we are not looking to make big money on the hedges and if they lose money while SEDG continues to make us even more money then that’s okay. I’m not doing these hedges in my personal account, but I try to communicate my hedge fund trades to you also, as you know.

But just because I focus so much on individual stocks and trends that doesn’t mean we don’t want to look at the broader market set ups too and you’ve seen me over the years and in the last few months make a few adjustments to my positioning as a result of that analysis. Including when I turned pretty much bearish in February and got even more bearish after MC’ing a CFA Austin panel where nobody was worried about The Coronavirus Crisis. Or when I got excited about the valuations and started loading up on stocks and covering most all of my short hedges in March when the markets and everybody finally didn’t just worry about the Coronavirus Crisis, but over-reacted to it. And most recently, I got to where I “hated” the stock market again in late August before adjusting that stance and doing some buying/covering of shorts a couple weeks ago.

Right now, I somewhat expect the stock market to go ahead and do yet another reversal here, perhaps throwing the long-awaited Hissy Fit For Stimulus that it’s going to take for the Republican Democrat Regime to decide to actually do another round of stimulus/bailouts/free money for small businesses and the middle class, unemployed and/or poor people in this country who are suffering from the ongoing economic impact of the Coronavirus Crisis. The rich and the giant corporations are still getting plenty of subsidies, new tax breaks, new protections not to mention the Federal Reserve buying an endless amount of bonds of giant corporations too. By the way, that last sentence explains why the stock market hasn’t thrown a Hissy Fit For Stimulus since last March when it threw a Hissy Fit For Stimulus for the ages.

But at some point, a consumer driven economy where small businesses are collectively the largest employer of the consumers in this country, is going to run into some issues keeping the party going for a stock market eventually reflects the earnings power of those companies that are big enough to be in it.

I am concerned that the valuations for many of our stocks are discounting many years of strong growth ahead already. I am concerned that there’s still way too much speculative frenzy in many smaller cap silly stocks and I see companies that could be outright frauds trading for hundreds of millions or even tens of billions of dollars.

And a major pullback if not outright final collapse of that speculative frenzy in the smaller cap silly stocks would clearly be a part of the the long-awaited Hissy Fit For Stimulus that I think might be coming. In both the hedge fund and to a smaller extent in my personal account, I am reshorting and/or buying some puts dated out to November, slightly out of the money, on some of the indices such as VGT, VTWO, VOO and SOXX. But again, I’m not looking to make a bunch of money on these hedges as much as I am simply trying to hedge some more here again after the markets have made this big move higher again.

What makes anticipating the long-awaited Hissy Fit For Stimulus here even trickier than usual is that there’s that whole Presidential Election thing that has the Republicans and Democrats playing even more games than usual with the limited power they have in our economy despite all their claims to the contrary. It drives me crazy when people are like “Trump’s economy is doing great!” Or when they’re like “Yea, sure the economy’s great, but that’s because Trump inherited a great economy from Obama.” Rinse and repeat that concept and just change the names whenever the baton passes from the D guy to the R guy. Meanwhile, the broader forces of innovation, technological revolution, middle class growing by billions globally, and what you and I do day to day is what really impacts the economy.

Among the trends that I’m focusing on right now is the most exciting market on the planet right now, the market with the most potential upside and the market that I am most convinced is about to grow exponentially into becoming the largest market place on the planet — The Space Revolution. As noted above, my hedge fund is already long SpaceX from last year and we bought more earlier this year before the price had moved up. We also invested in a privately-held company called Relativity Space which is using 3-D printing technologies to build their rockets. Additionally, we have made some nice gains on the Virgin Galactic stock that we bought late last year, as SPCE is probably the single best and purest publicly-traded play on The Space Revolution.

I expect that we will find more companies to invest in The Space Revolution in coming years as the market gets more developed, more funded and more accessible to Wall Street. I also continue to work on other Revolutionary Trends, including Rare Earth Minerals, AI, Robotics and Genetics and am more excited about some of the developments in those areas than, say, in smartphones and social media, which have already played out to become trillion dollar industries unlike these other sectors that are still burgeoning.

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