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Rich Bernstein Negative on Tech as Rates Rise
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Oil & Gas Exploration & Production ETF Allocation Reduced
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Gold and Silver Mining ETFs Allocation Increased
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ViacomCBS Sold
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iShares Silver Mining ETF Allocation Increased
The price of silver has been declining due to...
- March 30, 2021
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Rich Bernstein Negative on Tech as Rates Rise
Rich Bernstein, CEO and CIO of Richard Bernstein Advisors,...
- March 18, 2021
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Is the Retirement Crisis Really a Crisis?
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Alarming Chart of the Stock Markets of 1987 and 2012-2013
Several days ago I posted a chart showing the...
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Bill Ackman Thinks Diversification is for the Lazy
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T.T.S. Fear Index
Based on a scale of 1 (major complacency) to 10 (extreme fear):
Current and Selected Past Readings:
Date | Index | SMA Comment |
1/20/2021 | 2.3 | Massive stimulus and Fed support have nearly eliminated fear |
3/23/2020 | 7.0 | Coronavirus and oil price war panic investors to the highest level of fear since October 2011 |
12/26/2019 | 2.3 | Lowest level of fear in nearly two years (January 2018) |
12/21/2018 | 6.7 | Raised fears likely setting up a buying opportunity |
1/11/2018 | 1.8 | Unusually low fear could mean we're near the top in valuations |
1/13/16 | 6.3 | Terrible start to 2016 raised fears |
10/3/11 | 8.5 | A good tradable bottom (S&P 500 @ 1,085) based on lots of nonsense |
3/9/09 | 7.0 | Market bottom (S&P 500 @ 666); end of the world was nigh |
10/27/08 | 8.8 | Market had dropped 28% in 5 weeks, Paulson pulled out all stops to save Wall Street bankers |
10/12/07 | 3.2 | Market top (S&P 500 @ 1,562); worldwide housing bubble pricked |
Year-to-Date Performance as of February 24, 2021
Stock Market Advantage (SMA) Porfolio Versus Major Indices
Index/Portfolio | YTD % |
SMA Portfolio | 18.7% |
S&P 500 | 4.8% |
U. S. Small Caps | 12.2% |
Total U. S. Stock Market | 6.0% |
Total Int'l Stock Market | 6.0% |
Total U. S. Bond Market | -2.4% |
Russell Napier Warns of Impending Collapse
Napier claims the Fed hasn’t really printed any money, but has created bank reserves, which has pushed the dollar down. This has forced the emerging markets to print money.
He agrees with the popular notion that the Fed, through its low interest rate policy, has enticed investors into riskier assets. In essence, Bernanke “bribed investors to play.”
Napier says the Fed and other central banks have no power further out on the yield curve.
Napier believes the Fed will not tighten, but that creditors, who lend at longer term rates, will force a tightening. This will result in a surprise rise in real interest rates.
Napier insists there is one more deflationary shock to come, which he refers to as a “great re-set.” He said the collapse in 2008-2009 did not mark the bottom and stock markets only reached fair value. He claims the “death of equities” attitude was not present and the investor apathy typically seen at a market bottom was missing.
Napier predicts the S&P 500 will bottom in the vicinity of 400. Surprisingly, he prefers equities over fixed income, which indicates how much he hates bonds at current levels.
Investors need to protect themselves by investing in emerging market currencies, stated Napier.
SMA Comment: Napier predicting a low of 400 for the S&P 500 seems to be more of an attention getting effort than a reasonable prediction. Harry Dent has made a similar forecast recently.
However, it seems very unlikely the large caps will collapse to that extent since they are basically at the same level they were 12-13 years ago. Meanwhile earnings have expanded substantially during that timeframe.
A bear market could rear its ugly head, though, should real interest rates rise as Napier predicts. A drop of 30-40% from the recent peak would take the S&P 500 appreciably below 1,000, which would provide enough fear and panic selling to mark a long-term bottom.
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