Good Day, The sky is falling!! The sky is falling!!! Oil is 100 dollars a barrel. Stagflation is on the way! Oh my, what will we do! Panic Panic Panic! Just listen to the news and you’ll make a bad decision for sure.  Here he goes again! Panic is not a strategy. Folks, we discussed stagflation several blogs back. We are all over that scenario and yes, it is a valid concern, but not necessarily for that reasons that the media is giving. It will not happen that fast! If stagflation comes it will come slowly and steadily. You will have time to think about it. A lot of time and should it happen there will be plenty of misery to go around. If it happens it will not happen quickly and it will not leave quickly. I am a child of the seventies and stagflation nearly destroyed my life. Imagine graduating from school with 21% interest rates and 14.5% unemployment. We are a long way from that now. So not all is lost. My experience has been that it takes some type of artificial stimulus for inflation to get so high so fast. In the case of the late seventies it was the Arab (OPEC) oil embargo. They had total control of the oil supply. There were no shale reserves. That was yet to be developed. They hated America and they were out to inflict the maximum amount of pain that they could and they were very successful in doing that. Fast forward to today. Why are they screaming stagflation? Same reason 100 dollar per barrel oil of course, but in this case for a totally different reason. This time it’s because of the war with Iran. Iran did not have the best interest of the world in mind and never did. They immediately said they were shutting the straight of Hormuz down. 30% of the worlds oil passes though this straight. Plus Iran is a big producer of oil. Okay, traders panicked and oil became 100 dollars a barrel inside a week. No surprise there. So the question now is can Iran keep the straight of Hormuz closed. Well…They’re certainly not going to do it with their navy as over 40 of their ships are now at the bottom of the ocean. They have been able to shoot a few missiles and drones into the straight but lets face it, their ability to do so has been greatly degraded and will likely be non existent in another week. Then there is the fact that the more missiles and drones that they shoot, the more bombs that will fall on them. Folks if they continue, they’ll be bombed back into the stone ages. This can only go on so long. It will and must come to an end. The U.S. and Israel have total air superiority. It’s not a matter of if this will end but when.  Also don’t forget that the U.S, is a net exporter of oil this time around. Now let me get to the bottom line. This war will end because Iran will not be able to last long and when it does the price of oil and all things effected by it will turn around on a dime. These high prices are not permanent. They are transitory. Be careful if you are trying to make long term conditions based on these short term conditions. That is a recipe for underperformance.  Our strategy is to remain invested at 100/I. Some of my indicators are showing a bottom to this sell off. Given that and the fundamental conditions that we  just discussed, we have decided to ride this out if at all possible. We don’t want to risk not being invested when the market turns back around as we feel the rally will be fast and furious! That in a nutshell is what we are doing and why we are doing it.  So we’ll keep praying, praising, and watching our charts!

The days trading so far has generated the following results: Our TSP allotment is currently giving up -0.82%. For comparison, the Dow is -0.78%, the Nasdaq -0.27%, and the S&P 500 -0.40%.  Again, this will turn around and when it does it will turn around fast.

Dow drops 700 points as stagflation fears grow with oil soaring above $100 per barrel: Live updates

Last weeks action left us with the following signals: C-Sell, S-Sell, I-Sell, F-Sell. We are currently invested at 100/I for the reasons we stated above. Our allocation is now -7.15% for the year not including the days results. Here are the latest posted results:

More Prices & Returns

God bless, Scott