Trump's SPAC worth $7 Billion and Markets Hit All Time Highs

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Market News and Short-Term Predictions

Another record high for the S&P 500 today as it approached quarter end and a 10% jump YTD. The chart below shows us that the S&P 500 is on a 5-month winning streak (not seen since 2013!).

This means we should not be surprised if a random 5% pullback happens in the next couple of months.

Other Market Highlights:

• Amazon (AMZN) says it’s investing an additional $2.75 billion in Anthropic, completing a deal it made last year to back the artificial intelligence startup and expand a partnership between the companies.

• Robinhood (HOOD) is rolling out a credit card to US consumers as it looks to become a broader financial-services company. At 3% cashback, that seems pretty damn competitive (but I suspect that rate is a way to acquire customers in the shorter term).

• Merck (MRK) rallied 5% higher as a new drug for a rare form of high blood pressure and got US approval.

• Former President Donald Trump’s Trump Media & Technology Group Corp. (DJT) powered higher after a SPAC merger this week. But should be met with some caution as the company is worth +$7 Billion on only $3.5M in revenue.

• Boeing (BA) on Monday announced a sweeping leadership overhaul that includes the departure of Chief Executive Officer Dave Calhoun by the end of this year. It’s a long overdue but necessary acknowledgment that the midair 737 Max blowout on a January Alaska Airlines flight wasn’t a one-off glitch but a symptom of broader cultural challenges.

• S&P affirms United States 'AA+/A-1+' sovereign ratings on economic resilience.

Overall, this week is slower in terms of news and interesting macro-level data. I kind of miss earnings season already :(, because that is usually where we get actual proof of whether or not companies are meeting their expectations and get a better sense of the trend is still our friend.

Usually, banks are the ones to kick off earnings season. JPM is a holding in the public portfolio and their earnings are 4/12/24.

As a reminder, with Good Friday being a federal holiday, markets won't be open on Friday.

Lessons to Be Learned

While most of my portfolio is geared toward stalwarts or growth-related companies, I do have a handful of mature businesses that have steady cashflows, but not a ton of growth. One example of this would be a stock like JPM. These tend to have lower P/E ratios to reflect the lower growth expectations.

One great aspect of these types of stocks is their predictability which adds some downside protection to the portfolio (they won't go down as much in a market correction as growth stocks).

As I look across the markets, there are still growth stocks I am nibbling at but a lot of stocks are on the more expensive side. I remember in 2021 chasing some names that I had no business buying. I remember even saying at the time that when I bought them, they were at a bit of a premium.

What I learned from that cycle, I am applying to the latest bull run since 2022. I'm not chasing.

As Warren Buffett has said "The stock market is a no-called-strike game. You don't have to swing at everything – you can wait for your pitch."

The point I'm trying to make is one way to lower risk of your stock portfolio while still remaining invested is to pick up some slower growers instead of selling all growth stocks and sitting in cash. Having some cash on the side is great, but another option is to allocate more to slow growers that way if the market continues to chug higher you get more upside than sitting in cash.

In the event the market turns south, you can always sell off slower growers to raise cash. Essentially, you'll never see me in 100% cash in the portfolio. I stay invested but will shift the type of companies I invest in when I feel overall valuations are getting a bit lofty.

Portfolio Update

Stock Watchlist

Stocks: TSLA, LLY, ADSK, SBUX, NOW, CELH, AAPL

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