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Weakness Finds Buyers, As Usual

Daily Rap 09-17-2020

Overnight, there were many markets that were a sea of red as they appeared to react to a modest bit of strength in the dollar. I don't know for sure that was the cause and effect, but that's what it looked like. The net of that was the S&P traded about 1.5% lower at its worst during the evening.

Departing of the Red Sea Today, it opened down a little less than that, then proceeded to ramp higher and cut the loss to about 0.5% in a couple of hours. From there the market rolled over and fell to slightly new lows before trading around at those levels until the last hour, when the indices lifted. By day's end the S&P was down just 0.75%, with the Dow better and the Nasdaq worse.

Away from stocks, as I mentioned, green paper was higher last night,...more

Last year's posts for Ask Fleck

Q: Fleck,

Very interesting strategy with CWH. I’m so used to precious metals and mining equities so I find it interesting that you’re bullish on a stock like CWH. I know you think this stock is still inexpensive at the current price level. If they execute on their initiatives in 2021 and this specific market continues on the growth trajectory it’s on right now, what do you think the stock could be worth by the end of 2021? The company has a nice growth strategy to try and grow regardless of the pandemic boom effect. There are a lot of businesses right now that are capitalizing on the boom they’re business is experiencing from the pandemic but it’s hard to analyze the impact on their business or how the demand will normalize when the pandemic is no longer a major concern. I do think RV interest won’t be heavily impacted post pandemic like some other businesses that have experienced an increase due to the demand increase from this pandemic.

Fleck: I'm interested in the business, but my major focus is Marcus more than the business. If he wasn't CEO, I wouldn't buy it. I really love how he thinks.
(posted: 9/16/2020)

Q: Fleck, not sure if you saw this announcement by MSTK:

MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M

But basically, they are holding bitcoin on their balance sheet as a hedge against inflation.

My question: do you see any risk in holding gold for an extended period, say 10+ years, where there simply won't be the same number of buyers as today?

I bring this up because there is some inherent assumption here that as inflation goes up, people will gravitate towards inflation hedges. But from an age demographic standpoint, I don't see folks younger than 35 being interested in gold, and heck most of them don't own assets anyway.

But as they acquire investable funds, they will move to what is more native to them....things like technology, Crypto, Robinhood, etc. make sense to them. They aren't going to go out and get a safe deposit box to hold gold. And on a larger scale, it's interesting that a company like MSTK would diversify into BTC, not GLD.

They could just be a 1-off, but $425MM is a sizeable bet, and as a public company, they have to jump through some hoops here. Do you think this portends some longer term risk for gold holders though?

Fleck: I'm not even thinking about worrying about 10 years from now, but I think your assumptions are incorrect and concerns overblown, in any case. IMO, to assume that you know how many buyers will be there in 10 years is kind of crazy. A lot will depend on the policies that are pursued. Lastly, I have little interest in Bitcoin as a hedge.
(posted: 9/16/2020)

Q: verry slow "bounce" for the USD?

any thoughts on this?

Fleck: Nope, no big opinion.
(posted: 9/16/2020)

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