WASHINGTON, February 3, 2016 – In all honesty, there’s not a lot of concrete news to report today except for the same old, same old. Oil, commodities and stocks of all shapes and sizes are trading seemingly at random, with prices either overreacting or underreacting to earnings reports, rumors and whatever else the idiots running the Wall Street circus happen to be throwing at it.
In short, this is no time to make firm investment decisions as you’re likely to regret them within minutes if not seconds.
For example, after plunging again for a couple of days and despite continued high inventories, WTI crude oil is up 6 percent as of 2 p.m. EST. Who knows why? Perhaps the price has been influenced a bit by today’s weaker dollar. But why should this make such a difference today when it didn’t during other radar up-blips? Nobody knows.
At the same time, our favorite refiner, Valero (symbol: VLO) is getting pulverized, perhaps because the company mentioned that its tiny ethanol refining adjunct didn’t do so hot in the 4th quarter. So what? Earnings were excellent, as reported on January 28, refineries have experienced no major outages, and Valero promises to run flat out—or higher—in Q1-2016. But no matter. Because… ethanol. Down she goes. Reflexively, we picked up a bit more. But if the irrationality continues, we may regret that move.
That said, no one, including investing and trading veterans more grizzled than yours truly, really knows what the hell is going on, which is a sure sign that the Federal government and its creatures, the Fed and the SEC, have no clue or direction.
The President, of course, doesn’t give a damn and hasn’t for the past 7-odd years, save when he can blame bad stuff on Republicans or on the rich bankers that funded his campaigns. America’s Golfer-in-Chief has finally succeeded, largely by inaction and wrong action, in ruining the world’s greatest-ever economy, and at this point it’s going to take quite a lot to fix it. Which certainly won’t happen during the remaining 352 days of this miserable excuse for an Administration.
To borrow the title of a famous novel, the Federal government at this point is nothing more than A Confederacy of Dunces. Consequently, the stock market, which tends to be a barometer for such things, is reflecting this. And how.
After being down rather badly for much of the day, at roughly 2:45 p.m. EST, the Dow is off to the races, up 121+ points, with the S&P 500 up a modest 3.26 and the tech-heavy NASDAQ getting pounded, off 21.5 or thereabouts as we write this. Who knows where the heck things will be in another hour. Buy program express today, sell program express tomorrow. What utter nonsense.
Today’s trading tips, such as they are…
Aside from our potentially ruinous bit of passion regarding Valero (VLO, see above), we’ve been getting ever more defensive, moving to utilities and bond ETFs and a few preferred stocks as well. Cash, though, may be everyone’s best investment right now.
Also, it might be a good idea at this point to buy either a bit of physical gold or, if you still believe in ETFs, perhaps nibble on one or two of the more accessible precious metals ETFs.
We tend to use the thinly traded physical gold (SGOL) and physical silver (SIVR) ETFs, given that A.) They’re Swiss, and you can still generally trust those banking gnomes over there; and B.) With our current broker, you can trade any amount of these ETFs you want without in or out commissions.
In many ways, a more useful gold ETF is IAU, which is priced so people can afford round lots. But then again, there are those commissions, at least for us, so that makes it hard to trade small amounts and make a profit.
However, remember, anything involved with precious metals is hazardous to your digestive system, as this stuff goes up and down wildly. If you’re the conservative type and don’t like to venture much beyond stuff that works like CDs, avoid precious metals at all costs.
Real world economy bears insist on holding the metals themselves, although that’s been a terrible idea for the past 2 years or so. But nothing remains terrible forever. On the other hand, which genius can tell us for sure when the coast is really clear for precious metals. Not yours truly, that’s for sure. Just be careful if you do this.
Otherwise, any number of ETFs that represent short, medium or long-term government bonds are the way to go. Lately that seems to be where everyone is going to hide from this market’s churn and burn mentality. As in the 1930s, the trust is now pretty much gone. The longer this continues, the more difficult it will be for all concerned.