I couldn't sleep this morning so I watched Bloomberg TV and texted my reactions to my trading friend. I thought I'd share with you.
Bank stocks passing stress tests and doing well
US banks passed stress tests and are poised to issue large dividends as the past year's pandemic trading this was good for them.
Bloomberg: Premarket prices of JPM, 153.40, BAC, 41.40, and WFC, 44.21.
I owned JPM at 101 in Aug/Sep but sold it at breakeven in Oct. And BAC at 26 in Aug and sold for a slight loss at 24 in September. I hate lost opportunity. On the bight side, I may not have made similar gains if I'd kept my money in bank stocks.
Lower impact of inflation to equity market
Next, Bloomberg had Janet Mui, Director of Brewin Dolphin Investments, talking about how her fund is moving toward a balance of value and growth as the fear of inflation wanes. This pissed me off because Cathie Wood and Jerome Powell both said the same things a few months ago—inflation would be transitory over the next year as the economy adjusts to the reopening.
Of course, the financial news had to panic and try to sow fear, uncertainty, and doubt (FUD) amongst retail traders with sensational reactions to every down move after April 15th, which, incidentally, was 2 days after my retirement portfolio reached its highs.
I used the down days to increase my positions in Cathie's ARK funds, including the new ARKX space fund, with the goal of increasing my allocation to 10% of my porfolio for each of the three funds: ARKF, ARKK, and ARKX. I ended up getting close, about 9% for each, before I stopped.
Cathie Wood is one of the only money managers who has consistently been telling the truth regarding the transitory nature of upcoming inflation.
Bloomberg: 10-year yield at 1.4850. Janet Mui, Director of Brewin Dolphin Investments, "More balanced on growth vs value."
Mui said despite the Fed’s now hawkish stance, she believes there won’t be rate increases until 2023 and even then, they're just projections, not promises. She effectively signaled her bullish stance. This is probably late, as most likely, her company is in position with their trades, possibly purchased at the lows last month, like me.
This upset me because just a month ago financial news networks were crowing about how the Fed was too dovish and commentators didn’t believe inflation was transitory. They drove fear into the markets and equities suffered, especially Cathie’s funds.
Cathie wasn't given much respect either, with a ton of articles about how she was a one shot wonder, comparing her to another female money manager from the dot com days (her name escapes me). Opinion pieces and forum posts said her funds were doomed to fail and that there were a ton of outflows from ARK ETFs by investors selling and taking profits. While some of the reporting was true, it implied that her rapid rise to the top was short-lived. The commentary was both unfair and ostensibly chauvinistic.
I used the FUD in the markets in late April, May, and June to increase my positions. Just yesterday I finally reached new highs.
The moral of the story is: Don’t believe the financial news. Trust Cathie. And me ;)
