Week In Review: MJ Highs And Lows, Rising Commodity Prices, Rising Interest Rates, Lower VIX

Stocks continued their relentless rise higher last week as the S&P (SPX) rose 1.23% to 3,935, the Nasdaq (COMP) rose 1.72% to 14,095 and the Russell rose (IWM) 2.97% to 2,289 – all new All Time Closing Highs.

The most interesting action last week was in the marijuana stocks. The main Marijuana ETF (MJ) was +42% through Wednesday before falling 26% on Thursday and Friday.

The most interesting market commentary I heard came from Josh Brown on CNBC’s Closing Bell Wednesday. Brown said that “valuation is junk science” in the sense that it provides “no signal” for stock direction. Stocks have been expensive for years and have gotten more expensive during the pandemic. But Josh thinks it doesn’t matter: “You throw your dart, I’ll throw mine”.

What then are we to base our investment decisions on? Josh talked about how the market had been correctly pricing growth stocks like Salesforce (CRM), Netflix (NFLX) and Tesla (TSLA) at extremely high multiples for years. He also said that “liquidity” is much more important than valuation. Putting it together, it almost seems like Josh is saying to buy the leading stocks at any price as long as the liquidity backdrop is good and hold forever. This is the philosophy espoused regarding The Nifty Fifty in the early 1970s and it didn’t work out very well. It won’t this time either.

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