The saying on the Street goes: "Sell in May and go away."
Equities usually take a dive in summer when the people who really move the market leave to do whatever it is that wildly rich people do.
But I didn't think that adage rang true this year, and so while many in May sold off, I held tight and posted double-digit returns for the Bergman Buy Index both for May and for June.
But now, it's time to sell, especially if you hold any indexes (I have warned against that since February when we created the index on the verge of the Covid-19 nightmare). Unless you want to hold for another 8 to 10 months, there is no reason not to sell most of your positions, most of which you can buy back cheaper anyhow in a couple of months.
Stocks are on the way down for the summer, while Covid-19 infections are on the way up.
In other words, exactly the opposite of what most market experts said months ago. If you stay in equities, stay in FAANG stocks or tech more generally; Nasdaq isn't going to fall as far.
Go for Gold
I don't talk about gold or gold investing for a reason; I think it's boring and better left to talented technical analysts making intraday moves or grandfathers investing their savings in something tangible after being persuaded by a commercial on Fox News. But it's time to get out of some equities and get into some gold. With all the turmoil in the near term, gold is a safe bet. Worst case, things do not totally unravel, and gold goes up. Best case, the world really does come to end, in which case it will go up even more.
The precious metal is up by around 16% since the start of the year, and analysts see the broad rally continuing as uncertainty over the virus, global trade tensions, civil unrest, unemployment--just to name a few of the world's current crises.
Bank of America Chief Global FICC Technical Strategist Paul Ciana said the uptrend in gold prices is set to test the 2012 highs of $1,790-1,805 per oz in the next week. If it breaks past $1,800, bullion might be poised to hit an all-time high of $1,920.70, Ciana said in a note Wednesday.
"The breakout occurring now that is ending Q2 completes an eight week trading range that has resumed higher," Ciana explained, according to CNBC.com.
"The range breakout targets 1900 while the head and shoulders continuation confirmed in April targets 1947. These patterns say gold can make a new all-time high in the (second half of 2020) with Q3 on our mind."
If you are buying gold, there are several ways you can go about it--from buying bullion in coins or bars to investing in a small-cap mining company with big upside but big risk. Of course, there are many more options such as exchange-traded funds (ETFs), mutual funds, closed-end funds, futures contracts, etc.
If you really anticipate the end of the world, best to buy bullion itself, bury it in the backyard with your guns, and await the apocalypse. A middle ground safe haven is to buy an ETF like SPDR Gold Trust (NYSE: GLD). For a less diversified but potentially more rewarding ETF, look at VanEck Vectors Gold Miners ETF (NYSE: GDX).
If you want to bet on a mining stock but don't want to let it ride on a small-cap that may go bust, I like Kirkland Lake (NYSE: KL), one of the few mining companies not saddled with debt; it ended the first quarter of 2020 with a net cash position of $531 million. The company also posted free cash flow of $130.9 million, representing a year-over-year increase of 29%.
Also, management offers gilded dividends, recently doubled, and they are not shy about buying back shares. That recent dividend increase was Kirkland's sixth in three years.
For some in-depth analysis of gold trading opportunities, check out https://www.sunshineprofits.com/.
Goodbye, Columbus...and Jackson, and Washington, and Lincoln and...?
"In 1492, Columbus sailed the ocean blue." He challenged conventional wisdom claiming the Earth was round, not flat (though even the ancient Romans knew that) when he set sail for India, accidentally "discovering" America. Or so you learn in school.
Then, a little more schooling, you learn that actually Leif Erickson who "discovered" the North American continent more than a half-millennium earlier, naming the region of what is likely modern-day Newfoundland as "Vinland," according to the Sagas which celebrate the adventure (or misadventure--like Columbus, he found the "New" world by accident).
Some historians insist that "Vinland' referred to the Cape Cod region of Massachusetts. In Provincetown, there stands a stone wall attributed to Leif's younger brother Thorwald who, it is said, traversed much of coast of the Northeastern Seaboard.
After a skirmish with Native Americans, he and his crew were forced to flee back to Iceland. That's right, the same Native Americans that you learn after a bit more schooling, discovered "America" some 10,000 years prior. After spending 15,000 years living between the continents, peoples of Siberian descent crossed a land bridge between Eurasia and North America where today there is an oceanic waterway, the Bering Strait.
And then, just when you think you know the story, new evidence changes the picture yet again. Now, the consensus amongst historians is that ancient Polynesians discovered South America by boat. Turns out that, while those Native Americans made their way South, they probably never made it to Peru. And if they did, they would soon have visitors.
Based on linguistic and genetic evidence, and some obscure details about the cultivation of the sweet potato, researchers now believe that Polynesian seafarers discovered the landmass of the Americas between 500 AD and 700 AD, centuries before Vikings like Leif Erickson. Oh, and then there are the Chinese. In his 2003 book, entitled "1421: The Year China Discovered America," Gavin Menzies laid out extensive but widely disputed evidence that Chinese mariner Zheng He sailed to the east coast of the modern-day United States in 1421, and may have left settlements in South America. The fact that East Coast Chinese food is superior to the rest of the United States may or may not be evidence of such a voyage.
So, what is the point of all of this? The point is that "America" (Columbus landed in the Caribbean, not New York Harbor), was discovered and rediscovered several times. Teach this? Yes. But should we celebrate the second European we know of who stepped foot in the New World after the Native Americans and Polynesians did and maybe even the Chinese just because, at one point, we thought he was the first?
The answer is no. And that is without even mentioning that on a scale of 1 to 10 (1 being the Buddha and 10 being Eichmann) he was about an 8 Â½.
So, setting aside the feelings of the Italian-American community (let's just make Amerigo Vespucci day a national holiday; he's just as Italian and less of a jerk and, oh, America was actually named after him), the avaricious rape / mass murder enthusiast Columbus is an easy one to call. But what about the other statues being toppled around the country?
Here is a list of criteria we should consider when we are thinking of tearing down monuments and turning old heroes into new villains.
1) Where is it located?
2) Just how horrible was this person by contemporary standards? What about by the standards of the time in which they lived?
3) What is it celebrating exactly? A specific accomplishment like a victory in war or the person's influence more generally?
4) Did their bad deeds outweigh the good? Are these person's bad deeds related to their contribution to history?
5) How critical was this person to the founding, preservation, or improvement of the United States?
Let us start with someone like Henry Ford. Henry Ford was a complete Anti-semite to the point of being a Nazi sympathizer. So, a statue of him in Crown Heights would seem grossly misplaced. As would a statue of him outside a federal governmental institution as he did not serve in government. But a statue of Henry Ford outside an automobile museum? Sure. Why not? The man is known for his influence over making automobiles, not running over Jews in his Model-T. Think of it the other way. Hitler was a vegetarian and an animal rights supporter. But does PETA use his face on its logo? No, because he is more known for killing Jews than saving jaguars.
Now, statues of Confederates are a no-brainer to me. And you do not fully appreciate just how many schools and streets are named after this schmuck until you visit the South. The ghost of this gruesome general is everywhere.
Robert E. Lee was a traitor to the United States. He fought on the side of a rebellion by several Southern States to prevent the federal government from abolishing slavery. It was always about slavery. The myth of the "Lost Cause" was a radically revisionist view of the conflict which started in the South and was later adopted in the North.
When someone says the Southern rebellion was about "state's rights," the right they are referencing whether they know it or not is slavery. And when someone says it was about "defending their way of life," the way of life to which they refer is a way life built on the backs of enslaved human beings. There must be another way to show Southern pride.
A Lynyrd Skynyrd T-shirt, perhaps?
So, when someone on the right mythologizing Lee as a kindly Southern gentleman or someone on the left says that the Civil War was never about slavery but about Northern industrialization versus the agrarian South, remember the words of Frederick Douglas: "I shall never forget the difference between those who fought for liberty and those who fought for slavery; between those who fought to save the Republic and those who fought to destroy it."
Toppling down statues like Lee's is a rejection not of history, but a rejection of its once lauded heroes. Statues are celebrations or somber commemorations--but they are not discussions. They are meant to enshrine a person or an event. Why enshrine the Confederacy and its traitorous generals? Commemorate the slaves, not the slaveholders. And do not worry, replacing Lee with a statue of a slave won't make us forget him. There are no busts of Hitler in Berlin, but people remember the guy all the same.
Okay, so Lee is obvious in my mind. But what about Andrew Jackson?
He may have been a monster, but he did beat the Brits at New Orleans (the same Brits that freed slaves during their attempted conquest, however). And he was an influential president of the United States, not the head of a cabal of traitorous revolutionary states. Should he go? I say yes, but others I respect say no.
We can all agree that a statue of Jackson wielding a bayoneted rifle in the Big Easy is more appropriate than a statue of Jackson donning a headdress outside the entrance to an Indian Reservation. Context matters.
Lincoln? He wanted to ship all the slaves he helped free to Africa.
Jefferson? This guy had the chutzpah to denounce slavery whilst owning slaves.
Washington? He was no prize either by current standards, but he is the founding father, the hero of the revolution who could have wielded all the power he wanted, but stepped down after two terms to set an example. Plus, he was honest about that whole cherry tree incident.
The Re-United States
Perhaps, as some historians argue, we should have changed the name of our nation at least once. After the Civil War, we should have created a new republic. After the addition of the Thirteenth, Fourteenth, and Fifteenth amendments to the United States Constitution, we really became an entirely new country. And what would be wrong with that? France, as an example, is on its Fourth Republic.
The downside of the United States' survival as a continuing Republic is that any statue commemorating a figure from the past that is now controversial is viewed as a contemporary national endorsement of that figure.
Can you imagine Catholic Italians getting all worked up about the bust of Nero? If we lived in the United States Part Deux, would we be as upset when we see a statue of Andrew Jackson, president of the United States Part One? Perhaps, but it is less likely.
So, topple the statues and tear down the portraits if you must; do not tear up the history books. And leave literature alone. Better you smash the bust of Mark Twain than take even the "N-word" out of Huck Finn's mouth.
Or better yet, change the name of our Republic. And let us start anew.
But that's not going to happen. So, before all the statues fall, just think about some of the criteria mentioned above. Because it will be a sad day when statues of Martin Luther King, Jr. are toppled over his view on homosexuality. And you agree that we should consider the time in which he lived, then we should do likewise for other figures as well. But even if we did, there were plenty of progressive figures who held liberal views regarding sexual preference during his time, and even going back centuries (Ben Franklin, George Washington, Alexander Hamilton, Thomas Jefferson, and Abraham Lincoln all either held progressive views on homosexuality and/or were gay themselves). Just as abolitionist views circulated during Lee's era, progressive views on homosexuality circulated during King's.
But here is the thing: Martin Luther King, Jr. did not fight a war to enslave gays like Robert E. Lee did to enslave blacks. So, what difference does it make what he thought of them?
And yes, Ulysses Grant, whose statue was also recently toppled, was a racist. So were many of the Union soldiers, most of whom were drafted. Still, they fought, as Grant did, for the right side. Are you really going to topple the statue of the bad guy most responsible for stopping the really bad guy from winning the war and perpetuating slavery?
As the proverb says, "the enemy of my enemy is my friend."
No matter how you feel about these statues, another question is whether mobs of people, however well-intentioned, should unilaterally topple public statues of historical figures, however monstrous? I say, sure.
But does the state have a legitimate interest in protecting those statues as well as a right to send police forces to thwart their destruction? I say, of course.
The nation, like the S&P, is on the precipice. Statues and stocks are going to fall this summer. How much and how many remains to be seen.
In the meantime, if history does indeed repeat itself, look to gold and precious metals for the rest of the year.
We may say goodbye to Columbus, but we will never say goodbye to the gold he so ruthlessly sought.
(The opinions expressed in this article do not reflect the position of CapitalWatch or its journalists. The analyst has no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only and does not constitute financial, legal, or investment advice)Back