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Today is Sunday 12th April 2020 and yesterday we published 2 videos
:
Gold and silver weekly update for the week ending 10th April 2020
and later in the evening:
What Really Caused Equity Markets to Fall
The former highlighting how well the stocks markets have done in recent weeks and the latter indicating more than one reason for stocks recent fall and the introduction of the term ‘mean reversion’.
Now today we thought we would continue with the equity theme as it is important to us that we present a balanced and not biased picture.
Some subscribers quite rightly are asking whether we are perhaps more positive equities than we are gold and silver.
Our answer to that really is that it is purely determined on timeframe and timing.
When the Dow fell to 19,500 and others were arguing a 15,000 or even a 10,000 Dow our response was that we could not see it move below 18,000 and in fact it did not fall below 19,000. At that time we thought many (not all) stocks were cheap especially if one was trading for short term profit. So any recovery or dead cat bounce could earn a day or week trader a handsome profit and with the Dow currently over 23,700 that certainly would have been the case.
Brokers in Asian markets only a couple of days ago we opening trading accounts at a pace not seen for years if not decades as speculative investors were of the opinion that one would not be able to acquire equities at such low prices again.
You see, with many believing that the main cause of the stock market falls is only a temporary phenomena and things will eventually get back to normal, coupled with some of the largest stimulus packages ever introduced into world economies, many believe that equities can only go up from here.
So with this mindset and often the contrarian, we thought it appropriate to highlight what Warren Buffet has been doing over the past couple of weeks and its not what one expected.
So before we continue, lets listen to 2 recently published articles:
Ok now before we read too much into what has been published, Buffet has sold stakes in a few shares, of which he held over 10% - airlines and a bank. This is not truly conclusive of anything to be fair – though one could argue that if the world economies are set upon recovery, particularly the airline shares could be deemed to be very cheap indeed – but Buffet could feel that they may run out of cash before that turn-around is achieved.
Hathaway’s quarterly report which will be published in may though will prove most interesting as we shall see the extent of all of his sales and purchases.
We amongst others reported many months ago that Buffet was holding over $120billion in cash, and most were of the opinion that he was either gearing up for a major purchase or that he was expecting stock market declines.
And of course we also have to accept the fact that Buffet whilst he’s often right – more so than being wrong – he isn’t always right.
With a potential unemployment figure of 20 million in the US within the next 2 weeks, its hard to see that as trade begins to resume, all of these jobs will be refilled and the same for other countries across the world.
Yes the stimulus will have an impact and shares/equities will be buoyed by this for sure, and unless Governments and central banks go all out including major infrastructure spend or MMT by another name, we are remaining cautious at present. We are not selling any of our equities (and frankly we hold only a few) but we are also not buying any either.
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