Date: November 8, 2021

Goldilocks Is in the House – No Concerns Anywhere

Listening to the media on Friday, you would think that the powerful employment report caused a major surge in stock prices. It was literally a parade of bulls with many being asked if things could ever get better. We now have the “perfect Goldilocks environment for stocks”. Oh boy. Uh oh. 20 months ago with the Dow Industrials at 18,000 almost no one wanted to invest. As stocks rallied and rallied and rallied, more and more investors hopped on board the bull train. But on Friday, there was supposedly no reason to be concerned at all? Life is good and everyone should go all in? Are they kidding?!?!

Looking at the data, investors seem pretty much all in right now. Options traders are back to euphoric levels of optimism to go along with the various sentiment surveys. Greed is abound. What a quick move from mild fear five weeks ago. Don’t get me wrong. I am not calling for a correction or the end of the bull market. Markets can stay irrational longer than anyone can stay solvent. I am just pointing out an obvious concern in the markets that the masses don’t seem to be worried about.

I try to be as transparent as I can with what I am doing in our strategies. It’s not easy as sometimes one strategy lightens up while another raises risk. And lately, there hasn’t been any meaningful or major changes. On Friday, our sector strategy sold its remaining position in a technology index and continued to buy more banks.

Finally, if you haven’t seen the video I recently published on The Tale of the Greedy, Imbecilic Investor, please click. Obviously, I like all of my videos or I would not publish them, but this one is really a sign of the times, sentiment wise. And I also throw in some comments that do not align with the masses. So far, I have received dozens of responses and I am eager to hear more.


Paul Schatz, President, Heritage Capital