Cash is King…and What Were The Signs Of The Top?

Tops happen slowly.

Bottoms happen quickly.

The FED has been trying to force everyone into risky assets for a very long time but they went into hyper mode in 2009.

The ‘book’ says do not fight the FED. It has been a great party if you were a risk taker in 2009. Interestingly, people that fought the FED and bought treasuries are also VERY happy. Take a look:

Total Returns since Nov 2009…$C: -8%$GS: -9%$BAC: -16%$MS: -24%$DB: -76%Long-Term US Treasuries: +61%

— Charlie Bilello, CMT (@MktOutperform) Feb. 3 at 08:26 AM

It paid to listen to the thinning ‘tape’ though 2015 and we were offered a bazillion opportunities to just stand aside and let the party in San Francisco, Boulder, New York and other pockets of the world end without you.

My stock portfolio started getting whacked in March 2015. I know because I was getting stopped out of a lot of long term winners and chopped around in any new ideas. My blog posts have gotten increasingly cautious but NOT cautious enough.

By December I had mostly given up and as of today’s close I wish I had gone short. I do not have the genetic and/or behavioral skills to do that. The glass is always half full for me.

I do believe it is NEVER too late to sell. Today may have been your last chance for all I know. You have to do what’s best for your risk profile and live to invest another day.

Some gnarly data:

Cramer’s now famous FANG – Facebook, Amazon, Netflix and Google – have given back $185 billion in market value the last 27 days…WTF!

The FANG losses are less than the cash on Apple’s Balance Sheet.

The biotech index will be at zero in a few months at this pace (down 40 percent in a few months):

$IBB vs. $SPY from the March 2009 bottom. #Biotech is up about 316% vs the S&P 500 which is up about 208%, atm.

— Kas (@jackdamn) Feb. 8 at 08:29 AM

The global Indexes are being routed:

Equities, % off 52-wk highChina: 47%Italy/Brazil: 31%Germany: 28%France: 23%UK: 20%Canada/Japan: 19%US: 13%

— Charlie Bilello, CMT (@MktOutperform) Feb. 8 at 03:00 PM

So what should one do?

As I blogged just three weeks ago…this is a digital recession. It could well now be a depression.

I do know that doing nothing is NOT a plan.

Your robo advisor would tell you that over 800 years the stock market has never had a down century…

If you are too scared to look at your portfolio you are the sucker in the investing game. Open your account page tomorrow and sell something. Do not neglect and try to garden and position yourself for the next great boom.

This digital recession is not a joke, but I don’t believe it is a depression. I continue to find great founders and write checks. The cash on technology balance sheets is very high. I have bought a few stocks. I hate getting kicked to the head so I will continue to take small losses and position as we work through this nasty market.

If you like oil, entertain yourself watching this:

As for what the hell is really going on …nobody knows.

People do not want to miss a party that has gone on so long and people do not want to be the last one out the door at the end of a party. The good news is many are passed out and you should not wake them up as you walk over them to leave.

Nasdaq 100 Index, Total Return2009: +54.6%2010: +20.1%2011: +3.7%2012: +18.4%2013: +36.9%2014: +19.4%2015: +9.8%2016 YTD: -16.1%

— Charlie Bilello, CMT (@MktOutperform) Feb. 8 at 11:52 AM

This is a crisis of confidence. The rest of the world hates our banks and we can’t surface one viable presidential candidate. The Chinese year of the ‘monkey’ and presidential election years have been great years to invest own equities historically, but we have no true leaders stepping up and let’s face it…monkey’s are not Unicorns.

Hopefully that helps.