Friday’s jobs report was as expected; strong, indicating that the economy is picking up steam. Also, the weak report for March was as I suspected; just an anomaly. Initially markets shrugged off the report until the institutions stepped in and put cash to work moving stock indexes to new highs.
Yesterday the S&P 500 (SPX) moved a paltry 0.00% for the day. Technically though it rose 0.09 index points. That was enough to make another all-time high on the index, following Friday’s all-time high close. In the process the index reversed all the losses since the March 1 high. The NASDAQ 100 (NDX) of course keeps chugging along making all-time highs of its own. Last week, recall that I said its May not August; but with zero movement, who would know?
Who was to thank for the move in tech stocks? It was not Emmanuel Macron who was elected President of France. Rather, it was Warren Buffett.
The Oracle of Omaha held his annual Berkshire Hathaway (BRA/a; BRK/b) investor meeting over the weekend. During that event Buffett talked about some of his existing positions, such as Coca-Cola (KO) and International Business Machines (IBM). He disclosed that he has reduced his IBM positions. He also said that he made mistakes by not investing in Google (GOOGL) and Amazon.com (AMZN) when he had the opportunity to do so at early stages of those companies’ development. He did have positive comments on Apple (AAPL) for which he holds a position in Berkshire Hathaway. Of course, yesterday, AAPL, GOOGL and AMZN all traded nicely higher. While those stocks moved higher on Buffett’s comments, IBM slipped as did his own BRK/a.
He also stated that Berkshire has a huge cash hoard for which he is looking for deals. I suspect that given his recent epiphany for tech stocks, he may be looking for opportunities in that sector.
While BRK/a has underperformed the SPX in the last year; over longer periods, it has performed better than the index. I believe, to outperform the SPX, Buffett will have to put Berkshire’s cash to work in growth oriented stocks.
I am not expecting more zero action soon. With the SPX a shade under 2,400, I expect that century mark to be eclipsed if not today then by the end of the week. I also expect the SPX to continue to underperform the NDX.
Next Tuesday I will be speaking at the Money Show here in Las Vegas.
With zero as my theme today, I will leave you with the 1980s techno-band Pet Shop Boys singing Two Divided By Zero.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GOOGL, AMZN, IBM, SSO, SPXL, QLD& TQQQ — although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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