My Game Plan for 2021

My Game Plan for 2021

There is a lot of talk about a stock market bubble currently and comparisons with 1999/2000. While I sympathize with these views from a valuation perspective, the environment back then was very different.

Back in 99/00:

1. Investors could park their money in Treasuries yielding >6% for (virtually) zero risk.

2. The Fed was raising rates. Yes, they had an emergency cut in Dec 99 because of fears about Y2K, but they hiked again sharply after that. Fed Funds rate was nearly 7% by the time they were done hiking. Cash wasn't "trash".

3. The government wasn't spending $trillions on stimulus bills and handing out helicopter money.

Yes, a small number of assets (notably TSLA and BTC) have gone parabolic, but plenty of mainstream stocks have not.

The stock market will not go up in a straight line. It never does.

There will be scary pullbacks along the way and those who are missing the rally will be quick to proclaim "this is the end" (as they always do).

My plan for 2021 is to ignore the scary narrative that will inevitably accompany each correction, and buy every single dip.

And I plan to keep doing this until the Fed signals they're going to tighten liquidity. When we reach this point, I expect things will unravel very quickly, and my plan will change accordingly.

Good trading!