by Robert Holman | The DefensiveAdvisor.com | July 28, 2020
Bullish … rating of 6 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish) but cautious.
The market continues to move sideways with a slow upward bias. We continue to overcome the negative downshift that occurs on days with negative news.
New coronavirus cases are coming down in Texas and Arizona, but it’s too early to say that about California and Florida.
A few random thoughts -----
Many stocks are moving up at incredible rates, beyond any reasonable value, meaning many investors are taking out-sized risks by overpaying for what they get. That’s what happens when investors get in a hurry to become rich. Many experts see those price gains continuing, but not lasting, because most of those companies do not offer a unique competitive advantage. In other words, a competitor can easily knock them down. Is Zoom really worth 1,400 times earnings? I love the product and the company, I have used it for years, and they do have an early-to-market advantage, but it’s easy for a competitor to duplicate what they do.
One company that does have a unique competitive advantage is Tesla. However, is it rational to pay almost 800 times earnings for this stock when one pays 30-40 times earnings for the typical growth stock? That seems highly questionable.
Gold has finally moved up, reacting to the huge increase in government debt (from the coronavirus payments). Cryptocurrency is moving up also. I was surprised this morning to hear a recognized gold follower, Dennis Gartman, indicate that he has started selling his gold, and thinks it will decline $100/oz. in the short-term. Most are calling for continued gold price increases.
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