Date: May 3, 2024

Individual Investors Just Don’t Like Feeding The Ducks

What a crazy volatile Fed afternoon on Wednesday. Massive rally and then huge decline as you can see below. My comment about buying weakness and selling strength was valid.

On Thursday, markets were strongly higher and I heard pundits crying about today’s employment report being leaked. Those conspiracy theorists never cease to amaze me. When the president and Fed chair get caught off guard by an economic report two days hence, you know that any talk about leaks is nonsense. Are there leaks in the market? 100%. But it’s a lot less pervasive than folks think.

Do you  know why the markets rallied? Look no further than the two securities I have been discussing. The 10-Year Note and U.S. dollar both fell. So stocks rallied. That’s the market we are in right now. Just a week ago with the S&P 500 below 5000 a popular and very loud commentator bemoaned that he “hated being so bearish”. Stocks bottomed within 20 minutes and have screamed higher.

Apple blew out earnings last night and announced the largest share buyback in the history of the universe. As you know, I have been concerned about the company for a while and I still am. While we own it in Unloved Gems, we lightened up a few months ago. Until proven otherwise, I think rallies should be sold.

Several months ago I was also critical of Super Micro, chart below. It had a meteoric and parabolic rise. I thought the mid-February wicked reversal could lead to one more high and that folks should lighten up or sell the stock. When the ducks quack, feed them. That high came in early March above $1200 and then the stock plummeted to $700. I remember people chirping at me when I suggested selling some stock along with Apple, Nvidia, Broadcom and Marvell. Regardless of the outcome, it was solid portfolio management and executing from strength.

Today is my last day in the Sunshine State. It’s been a long trip, but I accomplished everything on my schedule and had a good time seeing lots of folks. I am very excited to go home and see my family and pets. After my Uber mishap when I ended up at a trailer park instead of Dollar Car Rental, I woke up yesterday morning with a flat tire. I wonder if someone was trying to tell me something. While it’s humid in the mid-80s in Florida, I think it says 48 when I land after midnight tonight.

On Wednesday we bought more PM and more levered NDX. We sold RYPMX. On Thursday we bought JNK, EMB, FDX, RYRHX, DXHYX and more PCY. We sold RYRIX, PDBC, RYSPX, RYDHX, some levered NDX, some levered Russell 2000 and some FDLO.


Paul Schatz, President, Heritage Capital