Rajesh Chandra

  In 2020 we saw decoupling of ground realities and stock markets. The reason is due to government monetary policies which were very accommodative and most countries responded with massive deficit spending to overcome the shocks to economy due to virus. We know that stock markets are forward looking which means investors have a great deal of optimism in future economy. In 2021 we can expect the interest rates to remain historically low and continued support from government in form of stimulus. With historically high cash balances and very low interest rates in bond markets – risk assets like stocks are still best haven to park money. There are two key factors in 2021 when it comes to US. First is the effectiveness of the vaccine for COVID-19 and further spread of the virus. Second prospect is the partisan control of US Senate. If both executive and legislative branches of US government are held by same party then markets can expect long pending reforms in infrastructure, immigration, e

  (1) Buy Bond ETFs (EMB/TLT) at open of market in 2020 on Jan 2nd (2)  When S&P 500 corrects by 15 % from close of Dec 31, 2019 to 2746.16 we exit these positions S&P 500 was 3230.78 on 12/31/2019. 15 % correction happened on Mar 11th, 2020 when it closed at 2,741.38 (2)  Sell EMB and TLT on Mar 11th, 2020 (3)  Buy VOO and VIB on Mar 12th, 2020 Sell VOO and VIG as soon as S&P 500 crawls back 15 % to 3230.78 (4)  Sell VOO and VIG on Jun 8th, 2020 Re-Buy Bond ETFs and wait for correction in S&P 500 back to 15 % (5)  Buy EMB and TLT on Jun 9th, 2020 We are left with Bond ETFs at end of year (6)  Sell EMB and TLT on market close on Dec 31, 202 0 My strategy yielded only 9.26 % profit compared to S&P 500 index gain of 15.7 % from Jan 2nd to Dec 31st. I couldn't beat the index this time. My expectation was return of volatility which did not happen after COVD-19 started.

Trade War with China First assault by Trump administration on China started in 2018 in form of tariffs on Chinese solar panels, washing machines, aluminum, steel and other products. By late 2018 & almost all of 2019 more and more products were subjected to new tariffs. China reciprocated by counter tariffs. In early October – US government blacklisted & banned 28 Chinese companies from doing business in US. Few weeks later President announced that an initial trade deal was reached after China agreed to buy more farm produce from US and allowed US financial firms access to Chinese markets. It was also announced that recent 15 % tariff will be reduced by the US government. It seems cooler heads are prevailing now and eventually there will be pressure on US government to resolve the trade war with a final deal. US wants to keep in mind the interests of workers and farmers of mid-western rust belt to reach a deal with China. Irrespective of whether a favorable deal is reached o

2019 was a blockbuster year for stock markets! Those long on the equity (~ 30 % gain) were handsomely rewarded. Bond market (~15 % gain) also went up. I chose to stay away from bonds and focus on equities for 2019 and it was a right strategy. Method: My profits are calculated assuming buy of 100 shares at market open of Jan 2nd, 2019 and sell at market close at 31st December, 2019. I include dividends as well for total ROI. Broad market index returned a whopping 30.4 % (SP 500 rose from 2476.96 to 3230.78). My recommendation of MGC returned 32.93 %. My 2nd recommendation of utilities index (VPU) would returned 25.45 %. My returns were very close to broad market returns. However, my risky bet in form of “MJ” saw losses.

US Economy is now in the 10 year of expansion. Calendar year Q4 of 2018 was devastating for the stock market which have put market participants in a cautious mode. Everyone is convinced that ‘Recession’ is inevitable but the only question is ‘when’. Currently unemployment rate is at 49 year low. Wages have started rising in US. WTI Crude oil futures have declined 40 % from the peak in October 2018 now trading at $45 per barrel. Lower energy prices give more purchasing power for consumers. GDP estimates for next 2 quarters are not negative yet. Tax Cuts & Jobs Act which became law in 2017 lowered corporate income tax from 35 % to 21 % and most personal tax returns will likely result in higher refunds. Inflation reported by CPI is hovering less than 3 %. It is hard to make a case for an obvious ‘recession’ in 2019 given these +ve data points. There will be interest rate hikes by FED in 2019. But depending on how fast FED hikes interest rates - Yield Curve can enter -ve zone very

I had recommended 2 portfolios. My ‘defensive’ or ‘safe’ portfolio had a loss of 3 % but I still beat the broad market which went down by 7 %. I included ‘consumer staples’ in my defensive portfolio. This sector wasn’t immune to broad scale declines without “ITA, IYK, VCSAX” which represent the same sector I would have been positive. “Aggressive” portfolio met with a 15 % decline. Uncertainties over trade wars with China hit CQQQ massively. 2018 was still a year which saw ‘net’ growth but declining numbers as the year closed in.

Inverted Yield Curve A hotly debated subject in the markets is the looming threat of inverted yield curve (difference between yields of short and long term treasury bills/notes). Inverted yield curve has successfully predicted the last 7 recessions since 1960. There are many experts who have argued that the current inverted yield curve doesn’t pose a risk to a decade old bull market. The reasons range from unusual demand for long term debt since European debt is yielding much lower or because US government is issuing more short term bills. Future of economy of course cannot be decided by one chart. Many leading indicators like global PMI, consumer/manufacturing confidence and others are positive and indicate continued growth in 2018. However, policy errors by FED could significantly invert the yield curve and we could be in recession. Of course, we will not know a year from now if there will be economic stagnation. Markets Lot of optimism generated from President Trump’s tax refo

Sudden uncertainty at the end of 2016 due to President-Elect Trump made me go on the defense so I chose a very safe portfolio. The portfolio contained only 4 recommendations & after including the dividends the gain is close to 18.5 %. My portfolio narrowly beat SP 500 index! 2017 was a spectacular year for US markets. Every sector had positive returns. President Trump Stock market rallied 20 % and closed at historic highs. Was it a fluke, magic or exaggeration? Neither! Markets can be irrational but there is a good reason for a strong bull market. It is turning out that our current POTUS is the best thing that happened to US in a very long time. White house has made tremendous gains in every front right as promised during campaign. It has been less than a year since POTUS took oath. Some highlights: - Stock markets gained close to 20 % in single year & closed at record highs - Credited with elimination of ISIS from Syria & Northern Iraq - Cut funding for UN ope

2016 delivered a shock election of President Elect Donald Trump. Elections in Europe set to dominate headlines in 2017. Anger is rising against islamic refugees in Europe - these conditions favor leaders like Marine Le Pen (of France) and Geert Wilders (of Holland) to win national elections. Germany is likely to shift to far right as well. This theme will be prevalent across Europe in 2017. Election of Donald Trump thaws the ice between US-Russia relations which can seen as a positive sign in the geopolitical scene in 2017. President Putin is undoubtedly the most powerful and decisive figure in the world as of today. It is in good interest of any nation to keep friendly relations with Russia. Russia made successful military gains in Syria, Iraq & Ukraine - with change of guard in Europe & US - the war against radical islam in Middle East is likely to expand more. President Trump seems very unpredictable as of now with regards with almost everything be it foreign policy or e

President-Elect Trump beat all odds & got elected. This created an earthquake in bond markets leading to spiking of yields. My prediction of bond yields moving up softly was therefore incorrect as of Nov 9th, 2016. I recommended 4 tickers which yielded 13 % gain if bought on Jan 4th 2016 & sold on Dec 30th 2016 This portfolio beats broader S & P which grew only 10 % compared to 13 % of my portfolio!