Eagle, Colorado

The S&P 500 was up 3.40% in November bringing the year-to-date return to 25.30%.

I am pleased to report that in November our Appreciation Strategy outperformed the index meaningfully (almost double the return for the month) as we allocated our cash to new positions and the momentum stocks which had been driving returns earlier in the year came back to life after flat-lining in September and October.

The Income Strategy was up about half as much as the index with lower volatility and generated relatively high current income.

We still carry plenty of cash in both strategies and are well prepared for any sort of selloff that may occur into the end of the year. I am not necessarily predicting a selloff, but it is always a possibility. And given the strong performance in November even with a little extra cash, I am inclined to not press our luck too much here.

Our Tax-Free Income Strategy took a breather and was flat for the month after posting strong gains for the year.

Overall, all three strategies have done their jobs this year and I will assign some “grades” in my next blog.

Speaking of my next blog, I plan for that to be on or around 1/5/2020. I am going to scale back from writing these blogs twice per month to only once per month, on the 5th. While I enjoy doing it and I think there is value in keeping you informed with my latest thinking I find that every two weeks is a challenging schedule to keep up with while performing all my other duties at an acceptably high level.

With that said, plan on hearing from me at least once per month, on the 5th, in 2020.

Last month we looked at the smart money vs dumb money spread as tracked by sentimentrader.com which had just reached an extreme that suggested more upside in the very near term, but perhaps at the expense of a meaningful drop after that. Well, we definitely got the “more upside in the very near term” part out of the way and the market actually did start to pull back a little bit in early December with the S&P 500 declining by 1.52% over the first 3 days of the month. The market recovered those losses yesterday on the heels of strong jobs numbers and of course, trade “deal” headlines.

I put together an interesting but not very scientific chart last week (which was posted to my personal twitter). It seems to show that searches for the term “trade deal” increase when the market has been under pressure for a while, and seemingly just before it begins to rally again. This is consistent with my expectations and what I have been saying about President Trump using the trade war as a tool to achieve his agenda. We know he uses the stock market as a barometer of success, and we must count that as a bullish bias in the long run. And when the market is at all time highs and climbing it gives him flexibility to press harder on the Chinese, especially if their markets continue to languish on a relative basis.

I covered a lot of ground in my last post and so I will keep this one a little shorter.

I am pleased with our results for 2019 so far and with a short time left in the calendar year (a completely arbitrary deadline for everyone I know) I am confident that we are appropriately positioned across all our strategies for whatever may come next – not just for the next few weeks but well into the future.

Speaking of arbitrary deadlines… my daughter, Chas, had her 18th birthday yesterday. Nothing else will ever put into perspective (for me) how arbitrary some dates on the calendar can be, while at the same time being so incredibly important. Our little girl is an “adult” now in the eyes of the law. She can join the military and go to war, she can move out of the house, she can drop out of high school or she can smoke cigarettes till her heart is content. Thankfully, I know she won’t do any of these things. But I also know that just because the calendar says she is an “adult” (and in a lot of ways she truly is) – she will always be our little girl.

I love you, Chas! You are going to do something big!

Thanks for reading.

Shane Fleury, CFA

Chief Investment Officer

Elevate Capital Advisors & Elevate Ventures

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