April 19, 2021
Last week’s market performance was a quite a departure from its behavior over the past few months. Almost every index by asset class (stocks, bonds, commodities, not currency), by geography, by market cap and style was up about ~1.4% for the week. It’s possible, I suppose, that following a period of extreme rotation – in and out of everything except cash for months now – we would get a coordinated move up with a correlation factor of 1 across almost everything except currency (the dollar was off slightly last week). To my reckoning, we typically see this kind of correlation in a market dislocation (aka crisis). Is this a melt-up? I don’t know, and 1.4% wouldn’t melt butter, but I thought it was usual enough to make the note this morning.
As we begin the third week of the month, I note that short-term sentiment is once again high and frothy. In the back of my mind, I think of the mid-month sell-offs each month so far this year. The setup is the same – good gains the first half of the month, leading to high sentiment readings (overly bullish crowd), leading to a selloff of much of the earlier in the month gains. Same for April – we’ll see.
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I think it’s fair to say, you never see marketing from me. The reason being is that I’m about the worst marketer on the planet. However, I came across a brief biography of Nathan Rothschild not long ago and a quote of his, buried inside the piece, just jumped off the page as a kind of personal revelation that connected to a course I took junior year in college – Thermodynamics I. Last week I put a note together that connects the two and it describes what I try to do as an advisor. Look it over – this is me. If you know someone who would find this information helpful, or would like to be added to my distribution list, please forward the email and copy me. It is attached in a pdf above as well as linked (here) to our website. I hope you enjoy it, and thank you for listening.