The Trade That Paid!! November 15, 2021 #Turkey stuffed into the bbq#

Good Morning,


Starting to feel the stress of year end creeping up on me as all the things everyone put off for 10 months gets jammed into the back end of November before shutdowns commence. Broking is a funny place because markets don't stop (obviously) but a lot of the time you're trying to organise things with people at organisations that are getting close to checking out for the year.

Transfers, statements, new product information etc. So November can get a little busy, especially when I decide to bring back an old James Whelan family tradition: Thanksgiving BBQ at my place.


A tradition that goes back all the way to 2019 when I decided to stuff a massive turkey into my tiny Webber (a wedding gift from my first Head of Desk) and invite family over. We didn't get to do it last year (because Covid) so I'm making up for it this year with a more reasonable size turkey. One that will at least allow me to close the lid when I'm cooking it. Recipes welcome.


Now...speaking of stuffing a turkey into a market that can't get the lid shut!

Forward P/E's are out of the box but not too much on recent comparisons.

Also I'm seeing lots of chat around this chart which is a few massive turkeys taking up all the BBQ space...

a quarter!!!

But if you think it's overvalued and too heavily concentrated on a few names and "this time the big selloff is coming" and "inflation something something" then keep in mind what happens at the back end when the market does good through October....

there are no guarantees in this world but 6% is still 6%

For comparison's sake we haven't had as many all time highs as 1995 so it's not even the frothiest market we've seen. That being said, there is a lot of funny money still swilling into the market.

Happy to stay invested.


Also don't forget the McRib is still on the menu in the US which (as explained last week) is bizarrely bullish for stocks.


Investible ideas:

I checked out a Zerohedge article comparing China Credit Impulse to Semiconductor sales

Always keen on relationships like this. Here's the best bit of the article:

As shown, courtesy of Stouff Capital, semiconductor sales strongly correlate with credit growth in China.
Given China produces a large number of goods using chips, the relationship makes sense. Recently, China has clamped down on credit creation resulting in negative credit growth and, not surprisingly, weak economic growth.
If the semi-credit relationship holds up, the graph portends semiconductor sales may appreciably underperform sales estimates for 2022.

I'm inclined to agree that the exuberance is a little overdone on semiconductors, the ETF we follow for it having hit a take profit alert a few weeks ago...


Play the tape to the end on semiconductors then flooding the market and dragging prices down. Now take that across the whole market for 'goods' and you can see Goldman Sachs' point here...


So it's not the greatest news. However we're staying invested, just finding it hard to place new money at these levels.


All the best,


James



James Whelan | Investment Manager

Ground Floor, 5-9 Harbourview Crescent, Milsons Point NSW 2061

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