What a month!
World War III broke out on Feb 28th and the S&P dropped 10% into the end of March but it’s only taken two weeks to recover (mostly) as Trump’s cease-fire gapped us up last week. Oil is still $97.34 – up more than 50% from where we started and the Dollar is at 98, down 2% from where we started (which was already down 10% from where Trump started his second term) yet the market is flat – as if those things don’t matter anymore.
Even the VIX is back to 18.50 and 16 has been the low of Trump’s second term and 30 was the high (in March) – so I guess we can call that a win. AI is still taking everyone’s jobs and now it’s also going to crush the software sector but it will also be creating huge growth in the Ransomware Sector but none of that really matters as the planet is boiling us away – so let’s have fun while we can, right?
We SHOULD be spending $2Tn a year addressing Climate Change but we can’t afford that (though we can afford $1Tn for AI AND $1.5Tn for the Department of War) because AI can kiss your ass in 200 languages and God loves war (says Pete Hegseth, our Secretary of War) and all the Earth can do is give our children a place to live but aren’t children just another group of future migrants looking for a handout? F them!
In the first half of fiscal 2026 the Government spent $3.65 TRILLION ($519 BILLION on Interest alone!) and we collected $2.5Tn for a $1.15Tn shortfall which just so happens to be 100% more than we collect in Income Taxes. The US Military has already asked for $500 BILLION more for the 2nd half of 2026 (to fight the war that is supposedly ending) so the only way we could POSSIBLY close that gap would be to DOUBLE the tax rate or 10x the Corporate tax rate and, since neither of those things will happen – just accept the fact that we are completely F’d and enjoy the ride!
THAT is what’s driving capital into the market, aside from running an unclosable $2.5Tn annual deficit (WITHOUT the extra $500Bn) the US already has a $40Tn National Debt (by the end of this year) and rising rates (our current $1Tn annual interest payment is only 2.5%) will cost us perhaps $500Bn more in 2027 and our shrinking, aging work-force will cause the left side “Social Insurance and Retirement” side of the graph to fall below the rapidly rising (inflation + aging population) “Social Security and Medicare” side of the graph – not to mention “Veterans’ Benefits and Services” – because we’re making more veterans every day, aren’t we?
But we don’t talk about Climate and we don’t talk about the Budget in this non-stop Distractathon™ they are running these days. Still, the smart money doesn’t forget and they certainly don’t want to put their money into Government Bonds and there’s no profit in Housing and now the Dollar is looking iffy and Oil, Gold, Silver and Copper are looking toppy and Crypto has been quite a dud this year too:
So where else are we going to put our money if not into our beloved Corporate Masters? Who will get to $20Tn faster – the Euro or NVIDIA? That will put NVDA at #6 (I assume Chinese Yuan will grow a bit, along with Gold – while continued Dollar-printing is a given) and Open AI and Anthropic haven’t even gone public yet – they’ll be high on the list as well…
THIS is the environment we need to tailor our Portfolios to for the next 3 quarters of 2026 and beyond so of course we went to more CASH!!! in our last review (March 17th) as the worst thing you can do in your portfolio is IGNORE THE MACRO ENVIRONMENT and, though we did do a bit of buying at the bottom, we still have plenty of CASH!!! in our portfolios, which will allow us to go shopping AFTER we get some Q1 earnings and guidance to give us a bit more clarity on how companies are coping with these MASSIVE changes.
Last month, the S&P was at 6,699 and now we’re at 6,886 – surprisingly up 187 points (2.7%) so I’m both glad we went to cash and skipped the drama while also glad we held most of our positions and saved ourselves the bother of buying back our fantastic stocks. I just spoke to Quixote (see chat) and he feels good about my choice so now I feel better too!
Last month I said (and it’s still true):
Do I want half my portfolio’s fate riding on seven names that:
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- Are all capital‑intensive just as capital gets more expensive;
- Are all energy‑hungry just as war and AI squeeze power and fuel;
- Depend on global supply chains and ad/consumer spend just as war is blowing those up;
- And are all simultaneously spending or planning to spend hundreds of Billions more on AI and Infrastructure in this VERY uncertain environment?
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If the answer is “yes, I want to stay fully tied to that,” then sure – stay all‑in and hope “this too shall V‑shaped.”
The reason we’re talking about moving toward 70% cash is:
In a world where that is what the Magnificent 7 are facing, it is perfectly rational to take a big chunk off the table, keep a manageable exposure, and wait to see what these businesses look like after a quarter or two of real war‑time earnings and guidance.
If this war drags on for another year with $90–110 oil, 4%+ 10‑years, and disrupted shipping, do these position still make sense?
This too HAS been V-shaped but don’t be fooled by 70% CASH!!! as we were 50% cash in the first place so we KEPT 2/3 of our positions in the LTP and almost all of them in our smaller portfolios – counting on the STP do do it’s job – which it did well in a 10% correction so NOW we can buy with a lot more confidence BUT, BEWARE!!! – that 2-hour S&P chart is drastically overbought while the RSI on the daily S&P 500 is at 63.46 – meaning we’re very unlikely to pop 7,000 without another pullback.
Let’s see how we held up:
Money Talk Portfolio Review: I was just on the show on March 25th and we put up the Review on the 24th, as the show tapes the day before (5 pm). If you think I was having angst today (see my conversation with Quixote) you can’t imagine my angst on March 24th – trying to decide if I should call a bottom or get people out of this portfolio – which we can only adjust on show days (quarterly).
Well, that’s not true – I could have called and gotten a segment earlier to call a special adjustment but, as you know, I felt these positions were good enough to survive the worst – so we let them ride out the 10% drop. That turned out to be a blessing as we got very aggressively bullish in our March adjustments and now the MTP is at $543,335 (up 443%) with $257,170 (47%) in CASH!!! (have I mentioned how much I love CASH!!! lately?) – and that is off our $100,000 start on Aug 21st, 2024 so our 2nd anniversary is coming up (this is our 4th Money Talk Portfolio).
We added the SQQQ hedge last month and, as you can see, the short June $80 calls gained $16,000, which is more than we lost on the main spread – that is how we work our way into free insurance – as we have 6 more quarters to sell $24,000 in premium against a spread we only paid net $54,500 for (not even counting the $24,000 we already collected!).
There’s that concept in a nutshell – isn’t it crazy NOT to hedge your portfolio?
We also added SU and that’s on track but the key move we made last month was making a fundamental calls that XOM had gone too far up and we rolled 5 of our short Jan $130 calls ($18,615 at the time) to the $29,000 worth of short June puts and calls, which are already up $23,925 as XOM was kind enough to finally pull back!
As you all know, I am a Fundamentalist who has disdain for TA and this is why. Charts don’t tell you where things are going – only where they’ve been. Numbers, on the other hand – are the physics of the market – they will tell you everything you need to know IF you capture them all, keep them in perspective – and measure them correctly!
For perspective, we don’t get too excited about short-term fluctuations in the portfolio. A lot of our gains are caused by the lower VIX because we sold a lot of premium (like the XOM short puts and calls) and the premium lost value as it dropped.
Still, we’re in fantastic shape with a good cushion and I’ll be on the show again around June and by then, HOPEFULLY, we’ll have a better handle on the new Global situation.
IN PROGRESS
