By: Ross Silver
It might seem odd to write or say that you’re “holding a wolf by the ears,” but auribus teneo lupum—a line taken from Phormio (c.161BC), a work by the Roman playwright Terence—was once a popular proverb in Ancient Rome. I mention this proverb because the market is seemingly in a situation wherein investors are in an unsustainable situation, and in particular one in which both doing nothing and doing something to resolve it are equally risky. To buy into this market and put all your chips in, may spell doom as this could be the top. To sit back and do nothing but cast aspersion at those invested is an approach that many I know have taken. It has cost them many a dollar in missed opportunities but will they now be correct? Let us delve into the inner workings of the equity markets and its drivers…
The plan to cut the corporate tax rate seems to be going through, so more profit for investors, yipppeee. While this is great news, it sure seems as though this catalyst has been baked into the market given the DJIA is up a whopping 23% so far in 2017. The corporate tax cut has been a major catalyst and made the wallet of anyone short this market a lot lighter. So with the tax cut behind us, what is the catalyst that takes the equity markets higher? Ah yes, low interest rates. I have been preaching the gospel on low interest rates should mean equities only for an investment portfolio for close to a decade. I was chastised and ridiculed by many economists and fund managers for “recklessly” stating that only a moron has fixed income exposure in a low rate environment. Well, apology accepted from those who took shots at me for that comment because I was spot on. With that stated, rates are about to go up and in my opinion go up fairly rapidly in the next couple of years so I strongly believe now is the time to alter course from my equities only, in the portfolio, to now thinking about adding fixed income. I am buying bank stocks hand over fist in anticipation of what I believe will be a rate hike bonanza, if I am right, I will make a lot of money quickly, if rates don’t move higher as fast as I think they will in 2018 & 2019, I will still be right but just not make as much money. In case you are at all confused but what I am suggesting, I will make it crystal clear, I AM BUYING BANK STOCKS. I don’t buy ETF’s so don’t ask me what bank stock ETF I suggest, speak to your financial advisor and ask them what banks stocks you should buy. For those of you who have been asking me for years to invest with or alongside of me/Sylva, good news, in January 2018 www.sylvacap.com will contain a section that is devoted exclusively to the stocks I am actually buying and selling. And I’m going to publish the picks before I actually buy or sell the security. Yes, you read that correctly, before I buy or sell a stock, I will tell you so you get to front run me. Sounds cool right?!?!
Musings From the Month
Both Greg and I attended the MJBiz cannabis conference in Las Vegas a couple of weeks ago and it was very well attended and buzzing with excitement. At the moment the public cannabis markets lack two things 1) a banker or bankers who can bring real money to the table for public and private cannabis companies & 2) a “voice” that truly understands the trends and activity of the cannabis equity market. Well, we think we found a great banking group and more to come on them post our meeting with them in a couple of weeks. As for 2) we plan to be a lot more active with content in the cannabis industry so we hope to be the “voice”or a “voice” for the public cannabis companies. Three stocks we are very excited about in the cannabis sector are GB Sciences (GBLX), CLS Holdings (CLSH) & GW Pharma (GWPH). More to come on them from us in the near future.
Blockchain and cryptocurrency are hotter than a habanero pepper. Our stock of the month RIOT Blockchain, Nasdaq: RIOT, at one point nearly quadrupled in the month of November from the $6.80 price we mentioned them at. We remain a huge fan of RIOT and they are the only pure play blockchain company listed on the Nasdaq. They have a top tier management and I think RIOT could be a very special investment for those looking at the company as a long term investment versus a trade. More to come on them in the near future from us.
Last but not least, have a wonderful holiday season. I usually hate the holiday season because things slow down and I love going as fast as possible but this year I am going to slow down a bit and recharge because every day in the financial industry is a battle. There is no other industry that has the highs and lows of finance. The highs aren’t really highs, they are more like whew’s, the lows are brutal and very lonely. There is nothing worse than sticking your neck out and putting your name and reputation behind an investment opportunity and then having that opportunity faceplant on you. For my fellow comrades in the industry reading this, try to take it easy on yourself this holiday season and be thankful for what you have. Finance is a giant pile of humans all fighting to get to the top where there is fresh air and space to move, it is the most competitive and dog eat dog industry that exists. Finance makes your hair turn white, causes blood pressure to go to heavens and it is by far and away the best way to gain weight as the stress and pressure to be better than everyone else makes you eat stuff that you would never eat in normal situations, such as an entire basket of Red Vines or six gigantic chocolate bars. I hope this last section put a smile on a least one of you who are in this utterly insane industry with me and understands. Be well and see you in 2018!