Cyclical or Secular Bear?

Published on
December 19th, 2018
Duration
36 minutes

Cyclical or Secular Bear?

Skin In The Game ·
Featuring Mark Ritchie II

Published on: December 19th, 2018 • Duration: 36 minutes

Mark Ritchie II is cautious. He moved to 100% cash in October 2018. Many stocks are already in a bear market, but he’s looking for sentiment to sour further and for clear signs of capitulation before he dips his toe back in. Since filming on 12th December (originally for release on Jan 2nd), US equities have fallen an additional 5%, sentiment has deteriorated and some of the lows have been violated, but Mark remains in cash. Filmed December 12th 2018, in New York.

Comments

  • AB
    Adrian B.
    24 January 2019 @ 01:21
    Did Mark manage to buy back in again for the January rally or is he still in cash?
    • MR
      Mark R.
      28 January 2019 @ 19:31
      Adrian...we nibbled and have since scaled back out, are roughly 25% long in our Tactical trading model. According to our work there is at least more time needed before sounding the all clear and getting overly aggressive on the long side, we see this is more of a trading environment where sizing should be smaller and of a more nimble nature for the time being.
  • Sv
    Sid v.
    28 December 2018 @ 23:19
    prescient.
  • JK
    Jon K.
    24 December 2018 @ 19:34
    This is great especially in light of “biggest Christmas Eve stock drop ever”.
  • JM
    John M.
    21 December 2018 @ 07:56
    Although gold equities have performed very poorly in the first 9 months of this year, in the last three weeks they have been doing very well. He didn't mention gold at all??
  • DS
    David S.
    20 December 2018 @ 18:58
    With the world in more chaos that normal, I wonder why all the stock market downturn is blamed on the FED. It will take years to unwind the FED's massive problem - which is now everyone's problem. Price discovery, however, does requires a slowly rising hurdle rate to get rid of the zombie companies and return to some normality. The Fed should stop all forward guidance and sneak increases when they can per Mr. Druckenmiller. DLS
  • GF
    George F.
    20 December 2018 @ 13:36
    The transcript should have the charts and other graphics.
    • M.
      Milton .. | Founder
      20 December 2018 @ 16:13
      Hey George, thanks for pointing it out, we fixed it.
    • DR
      David R.
      20 December 2018 @ 17:34
      Ahh, yes that's *much* better! Tq milton.
  • sT
    sid T.
    20 December 2018 @ 08:14
    Disagree that holding cash means there is no skin in the game. It is probably the hardest position to hold though - it takes a lot of character to sit on a pile of cash and do nothing with it. Especially when people like Ray Dalio have said things like 'you will feel pretty stupid if you hold cash'. A few weeks agoI have personally moved to mostly cash except for a small portion in TLT (Thanks Raul and team! big gains there). And thanks RV team. Really enjoyed the interview. As always, WAY better those talking heads.
    • DR
      David R.
      20 December 2018 @ 17:39
      Unfortunately that was one of Mr Dalio's worst remarks ever, made days before the high. Now who looks "stupid"? Cash has outperformed stocks bigly since he made that remark. Especially foreign cash lately and maybe next year too.
    • DS
      David S.
      20 December 2018 @ 18:43
      Fear has kept me in cash for a long time. I did miss a lot of upside but feel better now. I can go into or out of cash without putting a ripple in the market. All these large funds have a real problem, especially in stocks in reducing positions. I believe that is why Mr. Druckenmiller played a lot in the bond markets. Lots of liquidity up to now. DLS
    • GH
      Garrett H.
      20 December 2018 @ 19:43
      You may feel stupid holding cash when the dollar devalues 30% as Dalio has called for. Not sure if that is what he is referring to.
    • DR
      David R.
      20 December 2018 @ 21:45
      Only 30% devaluation? .... How about a rapid 80% devaluation?... What if USD loses reserve currency status sooner than when most expect is inevitable. Highly recommended read: the new book by MacroVoices owner, wealthy tech guru turned individual investor and Hedge fund manager Erik Townsend: Beyond Blockchain The Death Of The Dollar. In a nutshell, the Chinese are perfectly positioned and poised to soon launch the first gold-backed digital currency and they're by far the global leaders in gold ownership and blockchain technology. For Martin Armstrong fans, this also jives with Armstrong's prediction and book this year explaining why and how China will displace US and the West as the global financial capitol of the world by 2030. Both are must-reads for those who don't wanna get caught poor with their pants down.
    • DR
      David R.
      20 December 2018 @ 21:47
      @DLS: Well played. First rule: don't lose money. Second rule: never forget the first rule.
    • EL
      Eriksson L.
      21 December 2018 @ 05:43
      Do you think we can get Grant to interview Ray Dalio? Thoughts?
    • DS
      David S.
      23 December 2018 @ 19:56
      David R. - How will China go on a gold back currency with only 2.3% of their foreign reserves in gold? They may hold a lot of gold outside of reserves. As discussed in RVTV before, China want to make as many of their payments in Yuan as possible. That will do a lot already to change the influence of the dollar. DLS
    • TH
      Tomi H.
      24 December 2018 @ 01:23
      Ralio Dalio meant with that statement that there might be FOMO rally where people holding cash actually start to chase the new highs again because they felt stupid holding cash. Ray Dalio DID NOT mean that holding cash was stupid. Check your facts.
  • JA
    James A.
    20 December 2018 @ 03:16
    Interesting shirt / suit combo (!) but I found Mark's commentary to be to the point and professional from a tactical perspective. Good watching.
    • BC
      Burton C.
      20 December 2018 @ 05:52
      Yes, Professional and focused
  • AB
    Adrian B.
    19 December 2018 @ 23:08
    This guy's body language does not match his statements. By the way wasn't he very bullish previously basically saying the bear's argument was overdone? https://youtu.be/XwcUuBi7RO0
    • KE
      Kathryn E.
      20 December 2018 @ 02:55
      Been able to quickly change your views as the scenario changes is a good trait, not the opposite. If my money was managed by someone else, I'd prefer for that person to change their minds as things move as to stubbornly holding losers.
    • EF
      Eric F.
      20 December 2018 @ 06:51
      Strongly agree Adrian. Very nervous / almost agitated. I like that he is flexible in approach but I personally found him too positive. We’re seeing cracks and I think there is a lot of pressure build up from monetary mismanagement over the last decade that this could be a doozy. I wouldn’t be hanging over this to BTFD, I’d be stepping away as a 50% plus drop is entirely possible. While that later figure is statistically unlikely considering how seldom we see such drops, circumstances merit. I’ve seen some say a 2/3 drop possible, which I wouldn’t write-off. By the way, good on Jay Powell. If his predecessors had half his balls we wouldn’t be in this mess to begin with. Some pressure on that man.
    • DR
      David R.
      20 December 2018 @ 10:22
      Almost too late to "step away", depending on what you have of course, as the selling has been indiscriminate! It's funny when ppl start to NOW sell their long-term funds, especially any good hedge funds invested in companies for which I see some market caps today at just half the book value! (I'm not commenting on the index). Kills me how some fools pay big fees to a great hedge fund then over-ride the manager by foolishly deciding themselves when to buy or sell it. What's happenin: http://adventuresincapitalism.com/2018/12/16/hedge-fund-armageddon/
    • JW
      Joel W.
      20 December 2018 @ 22:23
      I think he was bullish toward the end of 2017. I disagree that his body language contradicted anything he said; some folks are just fidgety, etc.
  • BY
    Brit Y.
    19 December 2018 @ 22:56
    Anthropomorphizing financial markets always feels weird to me. Sounds like his tactical asset allocation was something like a 180 day moving average.
    • DS
      David S.
      20 December 2018 @ 03:47
      Can you really tell a cyclical or secular bear market at the start? If the 2018 S&P peaked at 2700, would we call this a bear market down 5.7%? It would not be a good YTD, but it would not be a bear market. I guess it just adds to the excitement at cocktail parties. DLS
  • VS
    Victor S. | Contributor
    19 December 2018 @ 22:41
    Very professional -great thoughts.
  • JF
    Joseph F.
    19 December 2018 @ 22:24
    Excellent.
  • DR
    David R.
    19 December 2018 @ 15:10
    Good to be in cash but it must be the right type of cash and NOT the POS dollar, which technically going over the cliff. The dollar rally has been weak and choppy, symptomatic of a bear rally, and is still currently sitting 800 pips below where it was 2 years ago in terms of DXY despite the huge problems in Europe and others. OTOH, select EM currencies are up as much as 20% against the buck lately (incl interest on the higher yield), and even the sickly Euro looks like it should rise from 1.13 to 1.20. The buck like US assets remain a SELL. And even when US stocks, it's usually offset by the dollar weakening - something that will accelerate. Watch the Dow priced in gold - it has turned and technically looks like a crash coming.
    • DR
      David R.
      19 December 2018 @ 19:28
      ... and having written the above, the Fed instead isn't quite as dovish as some "experts" forecast. Fed also ignoring Trump's haranguing on raising rates. GOOD. I look forward to the tweet storm this oghta trigger, haha.
    • EF
      Eric F.
      20 December 2018 @ 05:21
      You trying to convince us, or yourself?
    • DR
      David R.
      20 December 2018 @ 09:58
      Eric, no I'm already convinced because I can read the chart and market, can't you? See, there goes the POS dollar over the cliff as as expected. Against ALL fx. Crushed. The fed merely delayed the inevitable next leg by a few hours.
  • MS
    Matt S.
    19 December 2018 @ 11:22
    https://coolmaterial.com/home/wood-and-aluminum-connect-four/ Thank me later....
    • DR
      David R.
      19 December 2018 @ 15:53
      Cool. Thank u. There's kids making, wiring & programming electronic versions of these in high school engineering class in Asia. Your program should always win.
    • JF
      Joseph F.
      19 December 2018 @ 22:22
      Thanks.