March 2024 Update
Ashley Nichols - Mar 07, 2024
February closed near its high, allowing the bulls to break out above the all time high. The market continues to defy cyclical expectations! Stephen shares his technical comments, Ashley shares her Millennial Minute, and we share our performance.
Money is a tool. It's something that supports your life!
Time to plan. Are you on track for your retirement years?
Whether your retirement is 10, 25 or 40 years away, it's never a bad idea to start planning early! With many consumers expecting to need more retirement savings than ever before, it's important to stretch your savings muscle as early and frequently as possible to help build your retirement cushion.
Our Portfolio
Transactions
There were no transactions in the accounts this month. The additions to the portfolio in January are working very well at this point.
As of February 29, 2024, we are currently around 16% cash, 18% bonds and 66% equity.
Returns on our 60/40, 70/30 & 80/20 portfolios before fees:
Interesting Charts
When we say "it's not the Netflix, avocado toast and lattes" that are holding younger generations back from home ownership, this is what we mean.
I'm not sure if it's relevant - but travel in the US also declines in an election year among Americans.
They tend to clutch the purse strings a little tighter during election times.
Technical Comments
https://www.brookstradingcourse.com/price-action-trading-blog/
- The S&P 500 candlestick was another consecutive big bull bar closing above the all-time high.
- Last month, we said that the odds slightly favour February to trade at least a little higher. However, the rally has also lasted a long time and is slightly climactic and a minor pullback can begin within a few months before the market resumes higher.
- The bulls want a breakout above the all-time high and got it in February.
- They will need to create a follow-through bull bar in March to confirm the breakout even if it is just a bull doji.
- If the market trades lower, they want it to be sideways with overlapping candlesticks.
- The bears see the current rally as a retest of the January 2022 all-time high and want a reversal from a higher high major trend reversal.
- They also see a large wedge pattern (Dec 2, July 27, and Mar 1).
- Because of the strong rally in the last 4 months, they will need a strong sell signal bar or a micro double top before traders would be willing to sell more aggressively. So far, there is no strong signal bar yet.
- Since February closed near its high, it is a buy signal bar for March.
- For now, odds slightly favor March to trade at least a little higher.
- The market remains Always In Long and the bull trend remains intact (higher highs, higher lows).
- The rally has lasted a long time and is slightly climactic. Traders are looking for signs of a pullback. There are none yet.
- Until the bears can create a strong sell signal bar, odds continue to favor the market to trade sideways to up.
Shared Article of the Month
The Fear of Missing Out
Posted March 4, 2024 by Michael Batnick
The pandemic-fueled asset bubble was a wild time to be an investor.
If it had a ticker, it was going higher. A lot higher. Didn’t matter if it was a stock or a bond or a commodity or a SPAC or a crypto token or an NFT. Prices became completely delinked from economic reality. Even if an investor were discounting, lol, fifty years into the future, things were completely out of control.
The only calculus you needed to make was “Can I sell this to someone at a higher number in a few hours or maybe a few days.”
The drivers of this behavior were clear at the time; what I’m about to say isn’t revisionist history. We were all home with a lot of free time, not much to spend money on, and stimulus checks coming in the door. So we gambled our asses off. Things got pretty weird.
Zoom, which came public in the spring of 2019, gained 735% between January and October of 2020, catapulting its market cap past ExxonMobil, a descendant of Rockefeller’s Standard Oil, which got its start in 1870.
SPACs raised $83 billion from investors in 2020. In 2021, Lucid came public through one of these vehicles, raising more than $4 billion from investors at a $40+ billion valuation. The electric car maker hadn’t actually put any cars on the road. But no matter. Four months later it crossed $90B.
Rivian went the traditional IPO route and came public sporting a market cap of $100 billion. Despite having barely any revenue, it was the second most valuable U.S. car company when it came out. In just a few sessions its market cap vaulted north of $150B.
Bitcoin ran from 10k to 69k in ten months. Ether went from $200 in the spring of 2020 to $4,800 by the winter of 2021. Dogecoin, a literal joke, had a market cap in the hundreds of millions of dollars in 2020. By ’21, it shot up tens of thousands of percent, stopping just shy of a hundred billion dollars.
And then there were NFTs. EtherRock, a picture of a fake rock, no seriously, at one point had a floor price of $2.26 million. Bored Apes and Crypto Punks were also fetching millions of dollars. CryptoDickButts, a more modest project, was fetching ten grand a pop.
Things got really silly.
And then it all came crashing down as consumer prices skyrocketed and the federal reserves slammed on the brakes of the economy.
ExxonMobil is now twenty times larger than Zoom. Dogecoin fell 92% from its high. Lucid crashed 95%. Rivian’s market cap is $10 billion, down 90% from where it came public.
In the summer of 2022, Bored Ape’s were trading at an average price of 170 ETH. The average price today is 20 ETH. Bitcoin lost three-quarters of its value.
The vibes got demolished.
And now they’re back. Boy are they back.
Bitcoin is just 3% from its high back in November 2021. It’s up 23% in the past week, 56% in the past month, and 200% in the past year. Not bad, but not quite as good as Dogecoin, which is up 100% in the past week. And that’s also not bad, but it’s not quite as good as Shiba Inu, which is up 230% over the past week.
It’s not just the coins that are rocking, NFTs are back. Pudgy Penguins, which you could have picked up for ~2 grand in October, are trading for ~$55k right now. Eight have sold in the last hour. A CryptoPunk just sold for 4,500 ETH, or $16 million.
It’s not just the coins or the NFTs that are on fire, stocks are getting dumb too.
Two weeks ago, Nvidia added $276 billion in a single day after reporting earnings. That’s the most market cap gained in a single day ever. Today, the company is worth $124 billion more than it was on Friday on news that it’s Monday. The third largest company in the S&P 500 is up 72% in the first 43 trading days of 2024.
Riding the same wave is Super Micro Computer, which is up 20% today on news that it’s being added to the S&P 500. It’s gained 284% year-to-date (it’s March). It has a market cap of $61 billion on $3.6 billion of revenue in the most recent quarter. For context, FedEx is the same size and did $38 billion in its most recent quarter. This is a dumb comparison, but not nearly as dumb as the market is treating this stock.
I don’t know if the party is just getting started or if it’s going to end at 7 o’clock tonight. But what I do know is that this type of market can wreak havoc on your mental balance sheet.
It’s hard to watch and not feel like you’re missing out. FOMO is not evenly distributed. The more online you are, the likelier you are to feel it. The less secure your finances, the likelier you are to feel it. The more your friends are making money, the likelier you are to feel it.
Some people don’t have this gene. I wish I was one of them. Thankfully I’ve learned to control it. I’ve put personal guard rails in place. I implore you to do the same.
If you’re feeling anxious about missing out, picture what you’re going to feel like if this lasts another week, month, or longer. And if it does go on longer than you think it will, constantly remind yourself what happened the last time we were here, and what ultimately happened.
I have no problem with speculative behavior, but like walking into a casino, you have to know your limits, set them, and then don’t go back to the ATM once you hit that number. Have fun, but be careful out there.
The Millennial Minute
Remember when I was talking about influencers last month and how we should never blindly follow their advice?? Well, I'm doubling down this month! I've been seeing too much bad "blanket" financial advice floating around the social media space in the last few weeks, and it just makes me cringe!
That being said, there are some good social media personalities out there who are actively trying to help younger generations climb out of debt and into building wealth.
So how do you differentiate the two?
Read this month's article to find out!
Planning
New tax reporting requirements for trusts in 2024!
This article focuses on the tax reporting requirements for trusts, particularly, recent changes to these requirements for trust taxation years ending on or after December 31, 2023.
