The CNN Fear & Greed Index is this morning at 69 and is swiftly approaching “greed” territory once again and purchases of equities at these levels is historically very ill-advised for within weeks… or at the most a few months… those purchases will be proven to have been undertaken at extended, and very high prices. But as happened in the dot com Bubble of near the turn of this century, prices were egregiously, preposterously, stupendously, stupidly over-extended to the upside and then continued to become even more egregiously, preposterously, stupendously and stupidly over-extended for months and months and months. As our old friend, and mentor, Dr. A. Gary Shilling taught us, “The market can remain illogical far longer than you or I can remain solvent.”
Illogic reigns; the “Melt Up” has begun in earnest and it will stop when it stops and not a moment before.
To get the numbers out of the way, for the year-to-date stocks around the world as measured by our International Index are +3.8% while stocks here in the US, as measured by the S&P are +3.4%. The global leader… at least as far as our Index is concerned… continues to be Brazil, which led to the upside last year and which for the year-to-date is up a stunning 11.0%.
Also, once again, amidst the euphoria of the moment, it is worth remembering that stocks in global terms are still well below their highs made in May of ’15 when our International Index traded to 11,185. It does seem that that “peak” wants to be tested at the very least.
In our retirement fund here at TGL… and we’ve a few millions in the fund so it is not an inconsiderable sum and certainly it is meaningful to us… we are long of the shares of the largest steel producing company here in the US; we are long of gold in EUR and Yen denominated terms (having exited our position in gold/US$ late last week, a position established in the shares of the largest gold mining company in North America rather than in GLD or one of the other bullion ETFs.) and we are long of soybeans via the ETF, SOYB.
As of Friday’s close we are up 5.2% for the year-to-date and we are grateful for reasonably well defined trends; for taking small losses and for simply “Doing more of that which is working and less of that which is not.”