Well markets are quiet today–as expected as everyone takes a holiday for the next 3-4 days.
After this year, who isn’t looking for a ‘fresh start’? But we all know that there are high odds that 2021 will hold just as much uncertainty as was presented in 2020.
The 10 year treasury will close the year out around .92%–never making the assault on 1% in a strong fashion the last few weeks–but I think it is coming–I only wish I knew when. I hear all the ‘smart people’ saying it will close 2021 in the 1.50%-2% area, but I know better than to make such silly predictions as no one knows what will happen. With the FED essentially being part of the MMT (modern monetary theory) camp we are heading down paths that have never been explored—well I shouldn’t say never–there was Germany in the 1920’s when Germany hired all the printers in the country to print money. Of course we don’t need ‘printers’–we have computers and a few key strokes will get us a trillion dollars.
So as we go into 2021 the country is laden with ‘zombie’ companies–airlines, the cruise industry, hospitality and lodging–kept alive only by printing helicopter money and spreading it far and wide. Long term most will not be helped by this money–most ‘zombies’ are piling debt on top of debt–I see lodging REIT Ashford Hospitality (AHT) has borrowed $200 million (with options for more) from Oaktree Capital–at the bargain rate of 16%–exactly how this helps a company that was darned near insolvent before the pandemic I will never know–but ‘Wall Street’ has always been able to spin a good yarn.
So we can see as we enter 2021 most anything is possible—cheap or free money cures all your ailments.
Back on a more personal note–investing was difficult in 2020, but I am happy with the 4%ish I earned during the year. Too much cash most of the time, but December ended up being an excellent month and for this I am thankful.
I can’t help but think of the nervous nellies that bought high and sold low. The folks that entered the pandemic fully invested and when the market tumble occurred they sold out at the bottom. It happens every time we have a sharp drop in share prices–unfortunately many times it is those that can least afford it that sell at the bottoms. These folks now have all the money in money markets at .023% interest (I have a little dab still in the Gabelli money market and noticed today I got a 24 cent payment).
It is tough to fight the FED so for 2021 I will be starting off going with the flow–the FED will try damned hard to juice markets every time there is a tiny setback so I have to go with them until they stop. I will without doubt have dry powder, because I am pretty darned certain buying opportunities will occur multiple times during the year–and I will be there.