I have taken some time off from writing for many good reasons. I have been working twice as hard these past two to three months to concentrate more time and energy on LakeView Asset Management and client accounts. The need to do more research and focus on opportunities in what is clearly the best growth market of my lifetime, if not ever, has paid off handsomely.
Since the end of March, the S&P 500 (SPX) has, through last night’s close, rose 20.63% and since the March coronavirus lows, surged 29.49%.
Not to be outdone, the NASDAQ 100 (NDX), jumped 29.65% and since the March coronavirus lows rocketed 37.07%.
Take note, I have also used some of my “writing time” to attend to personal matters. My wife and I are renovating our home here in Henderson, NV, after making a strategic (and prudent) decision not to return east for the summer. There is a small likelihood that we might return east to upstate New York in August for a few weeks, but I am not counting on that. Furthermore, our daughter Carly received a great job opportunity in Phoenix to work for Fairytale Brownies. You must try some. It is worth the calories and money. So, as any good parents (and brother) would do, we helped her find an apartment in nearby Chandler, assisted her packing up and then make the move to the Grand Canyon State. Also, being consistently over 100 degrees here in the Las Vegas Valley, I have opted for some wet time and exercise in our pool.
I made a major business decision to fold the LakeView Asset Management Food & Restaurant Portfolio into our Growth Portfolios. While time consuming now, it will lead to more efficient asset management and better returns for clients in the future. Also, considerable time was devoted to taking on new accounts and adding assets.
What is the new normal for which I have used as the basis for my investment thesis these past few months? Here are a few bullet points:
- The Federal Reserve is flooding the economy with liquidity, more so than in any other period of time. The adage “don’t fight the Fed” rings true now more than ever.
- If you think that the equity markets are overvalued, please note my first point on the Federal Reserve. Right now, stock money managers are pricing the market based on 2021 earnings expectations, as 2020 earnings expectations were destroyed by the coronavirus shut down. SPX earnings for 2021 are currently estimated at $165. While the upside is somewhat limited on that basis, there still remains some upside.
- Remember, that the father of modern economic thought, John Maynard Keynes (who was a horrible investor) was thought to have said that “the market can remain irrational longer than you can remain solvent.” However, in current times, the market he might be referring to is not the stock market but rather the credit markets. The carnage in the credit markets is deep and everlasting. This has hurt our Dividend Value Portfolio. Recognizing what has transpired in the credit markets, I have also had to retool those portfolios. Honestly, this portfolio is going to need more time to heal. Perhaps the balance of 2020 and into 2021.
- What I call the “X”, “Y” and “Z” factors. Our economy here is the US is so focused on service and consumerism. The “X” factor is the percentage of companies and their people who will no longer return to an office for full-time work. The “Y” factor is the amount of people who have shifted their consuming habits to online portals. Finally, the “Z” factor is the huge exodus of citizens which has begun from our large older cities to other cities and states. Those more mobile people and families will do so. I will discuss the “Z” factor in greater detail in the future. Recognizing these three factors, I successfully retooled our Growth Portfolios since March which clients will recognize in their quarterly analyses.
So, if you have not done so already get with the program. It is not too late, though much of the low hanging fruit has already been picked.
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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC was long MPC - although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, (LVAM) an investment advisor representative, specializing in high net worth private wealth management. LVAM is affiliated with Kingswood Wealth Advisors Services, a registered investment advisor. 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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