ACIO And DRSK: And Now, For Those Who May Be A Little Nervous

The glib response from those in "buy! Buy anything that's down!" mode, when disparaging more conservative investors, is to quote the Wall Street maxim "don't fight the Fed." This truism has to do with not resisting the power of the Fed when they decide to lower or raise interest rates in order to stimulate or dampen inflation. It has less to do with the current misconception that when the Fed helicopters money that this is a buy signal.

The Fed has been lowering rates for years now, which has kept the market humming along. But how does the Fed lower further from its 0-0.25% target? Will the US go negative? Would you buy a US Treasury bond if you had to pay the Treasury to do so?

The market does not give a signal that is graven in stone. It must be watched carefully every day if one wishes to use it as a predictor of the economy. Black swans happen. Black buzzards congregate. You never hear the bullet that gets you. Six months ago the market was moving steadily upward. If someone took that signal only as the only way the market ever moves, they would have been completely blindsided by the decline in the first quarter.

We do not want to make the mistake of confusing "liquidity" with "solvency." Just because the federal government is willing to guarantee liquidity for many different instruments does not guarantee the solvency of consumers or businesses.

Does this rally have legs? It certainly has so far and I and our subscribers are delighted to have partaken in the fruits of the rally.

I am an optimist. I have faith in the strength and the work ethic of the American people. I know that markets rise about two-thirds of the time and only decline about one-third of the time.

As an optimist and an opportunistic investor, I am willing to buy any time I see an opportunity I can believe in, even though I grow more skeptical whenever I see an excess building. My buys during the down days back then included Raytheon (RTN), Carrier (NYSE: CARR), Texas Pacific Land (NYSE: TPL), and many others, all now well-ensconced in our model portfolio. By smart investing we have reaped some nice profits while still protecting the bulk of our nest egg.

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Disclosure: I am/we are long ACIO, DRSK.

Disclaimer: I do not know your personal financial situation, so this is not "personalized" investment advice. I encourage you to do your own ...

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