I have always been a positive person.
As I am about to turn 66, I believe that my life is only half over, and that the best half is right in front of me.
However, being positive does have its price. I have been unrelentingly bullish since I called the market bottom nine years ago, on March 20, 2009.
In the meantime, some 90% of my newsletter competitors have been bearish for the past nine years.
The reason is very simple. Predictions of Armageddon and that the Dow Average is about to crash to 3,000 sells more newsletters. There are reasons why I have only a dozen employees, while the competition employs 1,000.
But as this is my retirement I am not in it for the money. I would rather be right than richer. And helping the average Joe beat Wall Street is enormously satisfying at this stage in my life.
Having said all that, the stock market has so far gone up every day in 2018, easily breaching 25,000. Be careful what you wish for.
If we continue at that breakneck pace we will hit my final target for this bull market of 28,000 not in mid 2019, but sometime in February. Markets are just on the verge of entering bubble territory.
And I will repeat what I said the day after Donald Trump was elected in 2016. He will bring a higher high in stock prices, followed by a lower low. That is the guaranteed outcome of pouring massive fiscal stimulus on an economy that is entering its ninth year of recovery. So far, so good.
Look no further than the ADP National Employment Report that came out this morning, a monthly read on the hiring of 400,000 American companies. It printed at a red hot 250,000 figure.
There are now a record 6 million job openings in the US. With immigration on the wane, the country is about to run out of workers. What follows is a bidding war for employees, driving wages through the roof, and bringing a return of inflation.
Apparently, the bond market believes it this time around as it is not giving up the recently 2.40% handle on the ten-year Treasury bond. Bond prices are now at a nine-month low. The exploding US government deficit created by the tax bill is imminently going to become a BIG issue.
You were worried about government borrowing soaring from $20 trillion to $30 trillion? It may well go to $40 trillion.
The other development today is the Justice Department's announcement that it is going to step up enforcement of the marijuana laws. I have been begging readers to avoid this flavor of the day sector like the plague.
The reason is very simply. The states can legalize pot all they want. But it is still illegal at the federal level, and as any lawyer will tell you, federal law trumps state law all day long. Investors certainly are worried. They have taken the ETFMG Alternative Harvest ETF (MJX) down 15% today.
It is particularly symbolic that the Feds made the move in the wake California's legalization of recreational marijuana. It is all part of the administration's continuing war on the Golden State. What is to come next? The expansion of offshore oil drilling? That will go over like a lead balloon.
The reason that I am telling you all of this is that I know a lot of you are financial advisors, and that your phones are ringing off the hook with customer calls asking what they should do in these eye-popping markets.
If you have been reading my letter for a while you are already overweight stocks (SPY), especially technology companies (QQQ), protecting yourselves from falling bond prices (TLT), long oil or oil shares (USO), short the Japanese yen (FXY) and long the Euro (FXE), long some gold (GLD) as a risk control measure, and keeping your home (ITB), even though everyone is trying to get you to sell it, including the federal government.
Then all you have to say to clients is "Thank you very much."
If you are new to the Mad Hedge Fund Trader service, it may be time to reassess.
I have not issued a Trade Alert so far this year. The reason is very simple. I am waiting for a sweet spot. Here is what I am itching to do:
Stocks - buy the dip, especially in tech
Bonds - sell any rally
Foreign Exchange - sell the yen on rallies and buy the Euro on dips
Energy - buy oil and oil stocks on dips and avoid natural gas
Precious Metals - buy the dips
Commodities - buy the dips
Real Estate - keep the homebuilders
Quite simply, bonds are more expensive here than stocks are cheap.
In closing, I offer you below a picture from the New Year Eve party I attended in San Francisco. And I'll part with a final piece of prescient advice. It is a really bad idea to mix Champagne, Jack Daniels, and Jameson whiskey. That's why I started out 2018 with a monster headache.
What? Only 66 More Years to Go?
