Our Halloween Costume is ‘Conquest’

Stocks continue to push to new all-time highs, but it’s not a trick. Instead, before this Halloween weekend, we should consider this continued bull move a treat, because what investors have enjoyed since the pandemic lows in March 2020 has been an unprecedented wealth-creation treat.

As you likely know, over the past 17 months or so, I’ve been telling you that the “Four Horsemen” of this bull market — fiscal stimulus, accommodative Federal Reserve policy, vaccine/COVID-19 optimism and strong earnings — all have combined to keep the bull raging.

Well, here we are, ready to take the kids trick or treating in 2021, and those four horsemen are still firmly in place. As a side note, I think I might dress up for Halloween as “Conquest,” my favorite of the Four Horsemen of the Apocalypse. After all, I already have the horse, and what we do in my newsletter advisory services is conquer the fear, uncertainty and trepidation that comes with putting our money to work in the markets.

To conquer those all-too-human feelings, we pour a generous cocktail of rationality, logic and experience to our investment choices, because we know that man’s only tool of survival is his reason.

Of course, there is always a huge element of chance involved in life, and that is something you must understand about reality. Yet knowing that only means that the better prepared we are, the better we are able to cope with the randomness thrown at us by fortune, or misfortune, as it might be.

Now, this week, the major averages were higher on the back of yet another strong round of corporate earnings. Companies such as Ford (F), Caterpillar (CAT), Merck (MRK), McDonald’s (MCD), Microsoft (MSFT) and Alphabet (GOOGL) were among many others that reported robust results. On the downside, however, we had Apple (AAPL) and Amazon.com (AMZN) disappoint after Thursday’s closing bell.

Yet, despite a few disappointments, so far, this Q3 earnings season we’ve been treated to yet another better-than-expected round of reports, and that’s the real reason stocks keep pushing the new-high envelope.

Yes, there are hurdles out there in front of the bulls going forward. We have a Fed that is almost certainly going to begin tapering its bond-buying program in the next couple of months. But that is a “known, known” as former Secretary of Defense Donald Rumsfeld might have called it.

We also have the possibility of Washington putting together some new taxes that could create some dysfunction in markets by prompting some capital gains selling before any new taxes go into place. Yet, I am skeptical of any big tax increases being implemented by this Congress, as I don’t think there is the political will to do so. Of course, Washington has surprised the markets before. So, this is something we will be watching closely here.

Other issues of concern are the flattening of the yield curve, where the 10s-2s spread has compressed sharply as of late. Yet, we are still far from a yield curve inversion on the 10-year Treasury note. And while this metric is something I am watching closely, so far, we are not in the danger zone as far as the bond market signaling any major trouble ahead.

Then we have the current supply chain issues, inflation, rising fuel prices and historically high valuations for stocks. Cause for concern? Yes. Cause for alarm? No. Reasons to sell stocks? Definitely not. Of course, if these parameters change, then our outlook will change. Until then, be bullish.

As for our Tactical Trends Portfolio (TTP), this week brought on a very big treat via electric car bellwether Tesla Inc. (TSLA). Shares surged more than 20% since our last hotline, and yes, that’s just since last week. We now have a gain of nearly 60% in TSLA in just four months. Now that is what you call getting tactical!

Finally, considering that this is Halloween weekend, I want you to think about the following proposition: Life should be viewed as a benevolent trick, and one owes it to oneself, and to those around them, to savor the treats of the world and to celebrate existence by trying to make things just a little bit better than they were the previous day.