Whether we finish over or under 2,060 on the S&P no longer matters.
The broader NYSE is DOWN 800 points (7.2%) for the year but you won't hear that from your Corporate Media – because it doesn't suit the narrative of their Top 1% Masters – who want retail investors to jump into the market and buy the stocks they are still trying to unload in a thin market.
What really matters at the end of 2015 is that, despite MASSIVE intervention by ALL of the World's Central Banks, the markets have gone net nowhere for 12 months. If the market were a coma patient, they'd be discussing pulling the plug and just letting it die, right? At what point is a thing no longer worth saving? Like any good "death panel," we should be deciding whether or not taking massive artificial means just to keep the market flat is worth the cost.
Of course, there's the problem. The cost of artificially maintaining the markets falls on the Bottom 99%, who's children and children's children will be burdened with the deficit bills we are running in order to keep the stocks held by the Top 1% from falling faster than they can liquidate their positions.
Although Obama has done a fantastic job of slowing the growth in our debt (getting close to $19Tn total now), the damage was already done and still our Government refuses to tax our Top 1% people and Corporations, who are the sole beneficiaries of all this aid. Sure, you can argue that retirees had Trillions invested in pension funds that were also tied to the market but very few individuals had more than the $70,000 it took to bail them out – an amount they are now burdened with as debt.
In fact, less than 20% of all stock market wealth is held by the bottom 90% (income cut-off is $120,000/yr and over $750,000 total wealth) and barely 5% by the botom 80% – those that earn less than $60,000 per family. Debt, however, is distributed evenly by population so it disproportionately falls on the poor and, of course, when they have to cut social programs to pay off the debt, who suffers? Not the rich, that's for sure.
There are over 6,000 stocks on the NYSE and the Nasdaq and another 3,000 around the Globe so the S&P 500 is already the Top 5-10% of the corporate world and, like any Top 10%'er – they reap all the benefits of these massive market bailouts while the bottom 90% of the Corporations lose ground. In the Corporate World as well, the rich are getting richer and the poor are getting poorer.
You would think the bottom 90% corporations, at least, would be smart enough to complain and form a lobby and do something about the growing inequality of the system. The bottom 90% corporations tend to service the bottom 90% of the people and they are already freaked out because their customers have less and less discretionary spending power every year and it's certainly not likely to get better when each of us have a $160,000 debt bill hanging over our heads.
We are amazingly good at kicking the can down the road but, one day, the road will end and it will be time to pay the piper. We've seen the effect austerity has had on other countries yet we pretend it will never happen here and we borrow the next Trillion Dollars to prop up the markets for the benefit of the very few.
Not that we, at Philstockworld, aren't happy to benefit from these programs ourselves, but it's wrong and we know it. Even worse, we're using all this financial firepower and we're not actually fixing anything. We're not even investing in necessary infrastructure projects while labor and materials are so cheap – how foolish is that?
- Our Long-Term Portfolio does tend to focus on the S&P 500 – because that's where the money is going – and it's closing the year up 44.6% (as of last night), which is well over target for our 20% annual goal.
- Our Short-Term Portfolio is closing out 2015 up 207.6% and that's very nice as it's really supposed to lose money since it's primary function is to protect the much larger (and bullish) LTP. If not for a $40,000 virtual loss we are nursing on short AMZN calls (5 April $580s we sold for $44, now $124), we'd have astromical gains in the STP.
- Our Butterfly Portfolio is our steadiest of the 4 and it's up 87.4% in year two – miles ahead of schedule but steady enough now that we're expecting 30% a year going forward (gains start out slow but build over time).
- Our Options Opportunity Portfolio is very new, we started it in August and, so far, we're up 6% in 4 months but, using just $48,700 worth of margin, we have build some very big positions that we expect to pay off well in 2016.
We are going to focus on portfolio management in 2016 as 2015 was a year where our virtual portfolios hammered home our "Be the House – NOT the Gambler" strategy and now it's time to put what we've learned to use in designing portfolios that are well-balanced and able to perform under most market conditions.
I don't see any particular reason 2016 will be better for the broad market than 2015 has been and, as noted in yesterday's "Black Swan" post – things can certainly get a lot worse. We are "Cashy and Cautious" into the holiday weekend and that's not going to change very quickly just because the calendar turns a page.
Have a happy, healthy and wealthy New Year,
– Phil
