(Please enjoy this updated version of my weekly commentary from the Reitmeister Total Return newsletter).
The market is up less than 1% since last week’s commentary. Yet we have enjoyed one of our best periods of outperformance with the Reitmeister Total Return portfolio rising +3.35% over this short span.
Because for as crazy as 2020 has been, we are reading the tea leaves quite well. The main theme being that in a low rate environment it doesn’t take much to be bullish. And as the market looks ahead to new vaccines that stock leadership is switching out from FAANG and Stay @ Home stocks to the “Back to Normal” trends. These are the primary reasons we have been on the right side of the market action.
So let’s review that and all the other investment news that’s fit to print in this week’s commentary.
Plain and simple, the long run picture for the virus is winning out over the short term rise in cases. Plus in the short run we all know that the additional lockdowns and caution on part of populace will start to show in lower case counts in the not too distant future. In fact, the past few days may be showing a turning of the tide.
This theme was certainly a central reason for this week’s very “Risk On” session that was also showering gains on the “Back to Normal” trades. Gladly we had our rain buckets out in KRE, JETS and PEJ to capture as much of those gains as possible.
Then after hours on Monday we got word that Trump is comfortable with the GSA finally starting the process of transitioning things to the Biden team. Simultaneously he tweeted that he will keep up “the good fight” in terms of election results. However, this is the first glimmer of hope that he may be ready to concede the election. If true, then it greatly lowers the remaining risks of a contested election. This point was a big reason behind the follow through gains enjoyed on Tuesday.
Along with that came a string of announcements from the Biden team. None more important to the market than the appointment of former Fed Chair, Janet Yellen, to head the Treasury department. Her term at the Fed (2014 to 2018) was considered very Dovish in terms of accommodation and thus a positive for the markets. Thus, this key appointment was well received by investors.
The good news does not stop that as we had an array of improving economic reports. Most important of which was the PMI Flash reading from Monday which rose from 54.5 to a whopping 57.9 with strength seen in both the services and manufacturing components.
There was a semi-sour note struck for Jobless Claims last Thursday as it crept up from 711K to 742K. The fear being that renewed lockdowns begets increased job loss as was the case in the Spring of this year. So yes, we will have to watch this closely.
However, the complimentary Continuing Claims report showed another 429,000 Americans were able to drop getting unemployment payments. This gain in jobs should be on more full display in the early December ADP and Government Employment reports.
Next we see that Redbook Weekly Retail Sales flexed some muscle this morning at +2.8% year over year. That is one of the best readings post Coronavirus.
However, at this stage all eyes will be on holiday shopping that can make or break a year for some retailers. Certainly less people will be shopping at Brick & Mortar stores than the past. But will online shopping more than make up for that shortfall? That is what everyone will be watching closely over the next few weeks.
Overall I would expect total sales to be down from last year given how many people’s income is still negatively effected by the virus this year. But I suspect it will be better than current predictions and thus a positive for the overall market.
At this stage I would expect slightly positive bias for the rest of the week. That is pretty typical for holiday weeks like have now. After that might be a bit of a consolidation period to digest recent gains. Then maybe one more strong push from a classic Santa Claus rally.
Yet this kind of short term prediction is one of the toughest games in town. Overall I think we are seeing the big picture well and putting ourselves in good position to profit. That certainly came through loud in clear from our strong outperformance this week (+3.35%).
Note that I normally put out an end of the week note on Fridays. However, I intend to take off this Friday for family festivities. So unless something dramatic happens in the market, this will be my last commentary of the week.
I don’t know about you, but our family has gone through tremendous lengths to try and enjoy Thanksgiving together this year. Everyone got tested and then quarantined so we could celebrate in person. Heck, even hug each other for the first time in MONTHS.
In fact, this was my first Coronavirus test. I likened it to having a toilet brush jammed up my nose and then my brains got scrambled like eggs. My wife and daughters say that I may be exaggerating…how dare they mock my pain 😉
The point is that family is worth the effort. And truly for as miserable as 2020 has been…on so many levels…we can still find things to be thankful for. I hope you feel the same.
What To Do Next?
Right now my Reitmeister Total Return portfolio is correctly positioned to benefit from the “Back to Normal” trade for the market. That’s because we are overweight the groups most likely to benefit from society slowly, but surely emerging from the dark hole of the Coronavirus period.
In all the portfolio has 12 picks ready to excel in the weeks and months ahead including:
9 growth stocks trading at attractive discounts to fair value. Even our tech stocks are uniquely positioned to side step the air being let out of the tech bubble. In fact, two of them just came off monster beat and raise earnings reports that should propel shares much higher in 2021. The rest are in good industries like home building, auto sales, transportation and clean energy infrastructure.
3 sector ETFs that are perfectly suited to be winners in the back to normal trade. And even with the 25%+ gains in hand in November alone, they still have plenty of room to run as they get back to pre-Coronavirus highs and beyond.
If you would like to see the current portfolio of 12 stocks and ETFs, and be alerted to our next timely trades, then consider starting a 30 day trial by clicking the link below.
Wishing you a world of investment success!
…but everyone calls me Reity (pronounced “Righty”)
CEO, Stock News Network and Editor, Reitmeister Total Return
SPY shares were trading at $362.77 per share on Wednesday afternoon, down $0.45 (-0.12%). Year-to-date, SPY has gained 14.33%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
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