Weekly Observations for 1/19/2018 — Parabolic Trains

Last week, I highlighted a few examples of what a sound investment opportunity might look like in today’s overvalued markets. How about the other end of the curve? My observations this week include a couple of parabolic moves in the market that are worth watching — in much the same way one would watch an oncoming train.

Here are a few of the things that crossed my desk this week — trains and all. Happy Friday, everyone!

–  In the 12/15/2017 Weekly Observations, I highlighted Bitcoin just as it finished a rapid parabolic move, and cautioned would-be buyers. We’re now on the backside of that parabola, and those who bought into the frenzy have lost upwards of 40% of their asset value.

–  I’m going to repeat this until my investing career ends:  Buy stuff when no one else wants it — not when everybody wants it.

–  Here we go again…this week it’s Boeing going parabolic, along with a few other famous industrial companies. Boeing is priced at nearly 190 times the company’s net asset value. Whoever is buying it up here (that would be index fund holders and other price-insensitive buyers) are nearly guaranteed to not see a return on this investment during their lifetime. I’ll see you on the back side of this parabola too.

–  21 million taxpayers are going to lose the ability to deduct charitable gifts beginning this year. Those that plan ahead can easily preserve it, and I’m giving the exact details in my quarterly client letter coming out this weekend — if you’re not a client, you can request a copy of the letter.

–  On the economic front, a consensus view is taking hold that interest rates are going to continue climbing and we may be on the cusp of a bear market in bonds (rising interest rates). My go-to source for wisdom on this aspect of the economy is Dr. Lacy Hunt, and John Mauldin’s essay summarizing Dr. Hunt’s current view was easily the best piece I read this week. He posits that we have yet to see the low in interest rates — a highly contrarian view right now.

I have a list of additional observations that are going to have to wait until next week — I have the quarterly client letter to finish writing. Have a great weekend!