As we end the third week of trading in the month of November, two insane things happened this week: $450 million da Vinci sale and this shocker…
By Bill Fleckenstein President Of Fleckenstein Capital
November 17 (King World News) – The early going saw the indices slightly lower in a bit of a hangover after yesterday’s party apparently celebrating the House passing its version of the tax bill. On that score, what we ultimately end up with remains to be seen, because we don’t know what is going to happen once the Senate passes something and they try to reconcile the two bills. But for the moment, any potential disappointment is essentially ignored…
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After the early slight peek into negative territory, the market flopped around while leaking a bit more and closed with the tiny losses you see in the box scores. Away from stocks, green paper was weaker, oil bounced 3%, fixed income was higher, and the metals popped for a change (and for no reason), with silver and gold gaining 1%-plus (though it didn’t do much for the miners).
Sacré BBB-leu!
Continuing my observations on the lunacy of the current environment (e.g., the $450 million da Vinci), many of which would have qualified for the Mania Chronicles 3.0 had I decided to document them, yesterday a Parisian BBB-rated company (i.e., quasi junk) issued $500 million in three-year notes yielding -0.026%.
We have been peppered with so many absurdities, nothing seems absurd anymore, although you can be sure when folks look back at this period, they will wonder, “What were they thinking?” and the list of examples will be quite long.
Included below are two questions and answers from the Q&A’s with Bill Fleckenstein.
Lesson: Always Have A Plan
Question: Bill – My father who is 76 years old has been a equities bull since the 70’s. Unlike the millenials who may never have experienced stocks going down, he’s seen more than most of us and has concluded that there’s no crash that time will not resolve to the upside (though I would argue that if he needs to wait 17 years for the Nasdaq to catch back up to highs in 2000, he may run out of time to enjoy it).
About a year ago, he gave some tech stocks to my two year old son in a custodial account that I manage. I immediately sold and found that it’s a different feeling to have owned and see a stock levitate upwards for no reason rather than never owned at all! Not to mention having to tell Dad that I screwed his grandson (at least at the present moment) by not holding on to the stock.
Recently my father made another contribution to my son’s account and though I’ve been looking for the exits once again, I didn’t do so immediately this time and have been mesmerized by them going up while the miners have not. It’s been a challenging psychological experiment. Tell me that I’m doing the right thing by dumping them as soon as I can instead of being too cute and aiming for the top. 🙂
Answer from Fleck: “There is no reason you can’t ride them as long as you have a plan about what you will do if something goes wrong. If you don’t, you’ll have the opposite problem you have now.”
KWN Interview About The Insanity
Question: Funny. I was listening to your latest KWN interview, which was great, BTW. Toward the end, you talked about holding on until the insanity ended. Loved the analogy to 70 years in the Soviet Union! At the same time, the TV in the other room was running QVC and I heard them counting down…only 1,500 left…we’re running out…only 700 left…on and on. I was chuckling thinking it sounded like stock promotion in today’s market. Then I walked around and found out it was battery powered toothbrushes! Now, those were pretty exciting back in about 1980, but these are something brand new: they’re UNISEX toothbrushes! Several colors to choose from! Kinda like bitcoin and the various colors of paper being printed. Unisex money! It really is different this time! Hurry before we run out!
Answer from Fleck: “LOL. Really!”
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***ALSO JUST RELEASED: This Could Be The Catalyst For A Big Surge In The Price Of Gold In 2018 & 2019! CLICK HERE.
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