We are launched into a new calendar year. We don’t like the idea of artificial boundaries imposed on our thinking - Every day is the first day of the next period, let it be the next week, the next month or the next quarter of year. We buy when we think the next day will be higher, we sell when we think it will be worth less in the future! Yes, we had a good portfolio return in 2020. Do we sell? Maybe, if we were to expect a down period ahead or if we had a better opportunity for our cash. As you may have read in our year-end musings, we did then (and still do) expect to find the better results for the coming periods in equities. So far, so good and do stay for the ride if you can stomach volatility...

In truth, there are few (if any) alternatives to placing your money in equities. Bonds yield little to nothing and are as expensive as they have ever been. Real estate? Well, properties are a form of fixed income with the illusion of security. The costs are high – to name but a few - Friction on entry and eventual exit, “carry cost” in maintenance and taxes are a percentage of gross revenue. Liquidity? At best debatable. Please don’t talk to us about securitisation being a liquidity source for RE, the last guy standing is holding an asset, not cash!

TINA strikes again! There Is No Alternative... Stay in equities and or cash!

Many say don’t buy at a high... Well, we had some 50 consecutive new highs last year on most major stock indices. Only to reach yet new ones in the opening salvo of 2021...

Others are waiting “for the correction”. Some, like Godot, have missed on many percentage points of returns awaiting the aforementioned correction. We don’t like the term “correction” as it implies that the markets were or are wrong - they need to correct to a different level, a lower one... Can you read this differently? The markets have been “wrong” in being as low as they were (are!?) and will “Correct” upwards? Perhaps 2020 was a year in which the equity markets continuously “corrected” and rose to more appropriate levels?

We will add an observation of those who await the said downwards correction - When it does happen that markets fall, they are not the ones to buy! They will now quote the thought “don’t catch a falling knife...”

We read and see what is affecting our world. Much of it is bad; horrible even. But we also see record savings accumulating in zero yield cash accounts, poor returns on many investment accounts who had chosen to overweigh caution against returns. Yes, there will be days if not longer periods of falls in equities. The fears that rise as these moments come are the price to be paid for portfolio returns! Anxiety for Dollars... Those who panicked in March 2020 and cashed out, lost the next 9 months of the greatest market returns. Then we enjoyed a strong January until, out of left field, we all got smacked. And again, for almost three consecutive days. Just like March 2020, two days later and the equities’ sun is shining bright yet again. Don’t forget that it didn’t stop shining above the scary clouds...

The second thought we wish to share with you today concerns the power of social media. We have just emerged from the fiasco of the US Presidential elections. These were marred by social media perpetuating the thoughts of rigged elections. We saw the assault on the Capitol in DC. The concept of Truth has been blurred. Many had developed false beliefs over the centuries, many died for inexistant realities. The big change is the speed of propagation and the sheer reach of untruths.

Yes, this condition has hit us all where it hurts - in our portfolios... One or several such media channels propagated the idea that certain stocks are easy prey for the under informed masses - Go buy what is massively shorted by the Big Boys... Force the capitalists to cover at ever rising prices... Beat the hedge funds and their mogul managers and investors. Then Apple stock falls hard and fast (side victim) as the short sellers of Gamestop are called to generate margins, they sell the best and most liquid parts of their holdings. A storm in a teacup, perhaps a “correction” to bring in new investors out of the universe of sceptics who finally got their “correction”... As we are ardent believers in the wisdom of the dollar-weighted-thoughts expressed in the markets, we continue into next period long in the successes of 2020 i.e., Tech, Biotech, ESG and all that is virtual.