To investors,
Pessimists sound smart, optimists make money.
This old adage is proving to be more true every day. Adam Kobeissi is just as impressed with the market’s historic recovery as I am. He writes:
“The S&P 500 has rallied +20.4% over the last 41 trading sessions, its third-best run this century. During the same period, the Nasdaq 100 has risen +27.3%, its third-biggest rally since 2002. Only 2020 and 2008 haven seen such sharp recoveries over the last two decades. As a result, the S&P 500 and the Nasdaq 100 are now trading just 2.1% and 1.8% from their all-time highs. We have gone from a historically weak to a historically strong market in a matter of days.”
And this type of historic recovery usually suggests stocks will be significantly higher 1 year from now. Puru Saxena shows the average return is 20% in the next 12 months when the S&P rallies from -18% below a 52 week high up to -3% within 50 days.
This optimism in the stock market is not exclusively held by investors. EJ Antoni reminds us that “consumer confidence comes roaring back in May, reversing the April plunge; the level is still down significantly from November, but the stock market recovery has given it a considerable boost - it's interesting that the index has become increasingly tied to equity prices.”
So we have a historic rally in public equities, which is driving enthusiasm back into the market, and consumer confidence is finally recovery as well. But another area where we can clearly see the wide-eyed, bushy tail outlook is in the true global macro asset of bitcoin. Bitcoin Magazine writes “Bitcoin has stayed above $100,000 for 30 consecutive days for the first time ever.”
Not bad for an asset that started at fractions of a penny about 15 years ago. But don’t get too crazy in your price predictions for this bull market. Galaxy’s Alex Thorn writes “This is looking like a longer and more measured bitcoin cycle than priors.”
And it is not hard to see where bitcoin will likely go in the coming weeks and months when you take a look at the correlation to global M2 money supply.
So here is the thing — all the pessimists from April sounded smart, but most of them didn’t make much money as the market rallied in a historic recovery. Too many people think they can time markets, predict the future, and optimize short-term results. Obviously, the people who tend to do best though are those with the patience to stay focused on the long-term and simply hold great assets for as long as possible.
Simple strategy, hard to execute.
Hope you all have a great day. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
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Bitcoin Rises Amid Debt, Chaos, and Riots
Polina Pompliano and Anthony Pompliano discuss Circle IPO, bitcoin, rise of crypto companies on Wall Street, what it means for your portfolio, what is going on with LA riots, how we could solve the problem, and why Invest America is pushing to give every newborn $1,000 to invest.
Enjoy!
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