You Can’t Model Nothing Right Now

I’m pretty much a hermit as much as possible, but I have to say that I sure do miss interactions with random people at restaurants and hotels and grocery stores and on the street. And I am not thrilled about analyzing the same economic and market set up that we are in. I sure wouldn’t mind being a bit more excited about valuations and more importantly about economic and technological trends. But my analysis is what it is.

Really, you can’t model earnings or anything for the next year or two. Any models are more guesswork than usual — right now they’re just outright exercises in guesswork, really. Screens like this are worthless right now: “Stocks that trade at a 20-30 p/e with 15-20% revenue.”

Typically, the markets don’t like uncertainty and the inability to model any sort of future revenue and earnings for heretofore steady-Betty companies is certainly an uncertainty.

Then again, as always, it’s hard to bet against the US. Things usually work out for the United State of America. We still have by far the best system — including political, financial, technological, economical, market-al, etc — on the planet Earth.

So with all that, once again, I’m defensive and cautious and I’ve got a lot of cash and quite a few hedges right now. At this point, the only reasons I can see to be on stocks is this: Fed printing could make asset prices bubble again AND/OR the markets will somehow look past 1-2 years of crappy economy/crappy earnings and somehow rally anyway. Even if there’s a vaccine, even if there’s a cure, it’s going to be hard to justify paying the required 25-30x 2022’s best case earnings for the S&P 500 (I explained this in detail earlier this week), which is what it’d take for the S&P 500 to rally another 10-15% from these current levels. It could certainly happen, but it doesn’t seem likely IMHO.

That’s it for now. Stick with our Revolutionary picks, stay cautious, stay vigilant, stay defensive, stay home. So it goes for now. I’m sure we’ll cover all of this in much more detail in this week’s Live Q&A Chat, tomorrow at noon ET over video on here on Google Meetings or you can post your question in the chat room or over the phone at (650)457-1412‬ PIN: ‪669 351 265#‬.

I leave you with a couple shots of life at our house these days. I have to play like a 6 year-old (I do this often anyway, come to think of it) since my 6 year-old daughter doesn’t get kid activity like she used to. And Amaris gets her therapy over video conference just like everybody else these days.