June 21, 2021

Where Did the Pragmatists Go?

"Too much capitalism does not mean too many capitalists, but too few capitalists”

-G. K. Chesterton

    The condition of the markets is currently in the hands of the technical’s. Valuations in technology had been underperforming reopening stocks and inflation driven commodities only to find those sectors overbought and were due for a correction. And as that correction unfolded the positive correction in technical’s, once again put the familiar few in control.

    Last week’s correction in the broad indexes was unsurprising. But was surprising is the number of media pundits focusing on everything but the markets themselves, such as Bitcoin. First of all, no one talks about technical analysis, but in my opinion, they are well aware of it and use it in the background to recommend buying and selling in the markets, pretending to be the experts they are. Even some of the better known voices of investment discipline appear to be turning into Pindudes, strongly suggesting the need to abandon pragmatism in favor of the future reckless subscribers. In short, this is instigating much more volatility than even the Fed, and that’s why I’m currently neutral on the market and why that’s not a bad place to be, because even if the markets rally, we’re still in for the ride.

    The past week the markets have been correcting to the tune of a divided fed, regarding inflation, and a market that is seeing rotations that are keeping pace with growing uncertainties of how the reopening will prevail. The importance of using the volatility for buying and selling is important in management since being prepared for inflation can be accomplished by maintaining a diverse portfolio. For example, the banks have been met with selling as the first concerns about inflation subsided recently, consistent with the loss of momentum the sector is eventually going to come back, hence, selling some to take a profit is fine, selling it because it’s out of technical favor is not necessarily so. Currently, the Industrial sector has seen some weakness after it too rallied strong in anticipation of an infrastructure bill. Technically overbought and guess what, it had a reason to go down, the infrastructure bill has been in political deadlock. Once again, a reason to pay close attention to, but not a reason to run away from.

    Which brings us to the Algochums (remember them?) and Pindudes, both of whom are not pragmatic. Instead, they choose fear, revenge, and the power of the digital age to manipulate a gaggle of stocks that few money managers pay much attention to. People who have work and families and future obligations and dreams to attend to, want to know they’re covered when it come to their investments being managed to an active strategy, not a daily gotcha game.


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