Blue Moon Hunting
The fate of 2020 was hinted in the lunar calendar. For the first time since 1944, Halloween occurred under a blue moon - the second full moon within a month(1). Like most kids on Halloween night, the financial markets are overstimulated, prone to act irrationally and spastically, and have stashes of additional stimulus that the markets cannot efficiently digest.
Below are but a few of the seemingly irrational and spastic developments that took place in the stock market:
Unprofitable from 2003 to 2019 and notorious for missing production targets, in 2020 Tesla’s market cap increased by approximately $600 billion. The increase was greater than recent combined market caps of Toyota, Volkswagen, GM, Ford, Daimler, Ferrari, and Hyundai.
Peloton’s market cap sprinted to $45.3 billion, making it approximately the 350th largest public company in the world. Peloton has only recently started to eke out de minimis quarterly profits.
Compass Point Research indicated that Airbnb went public with a market value greater than:
- twice the total value of the hotel REIT sector.
- the combined values of Marriott, Hilton, and Hyatt.
Some Native Americans refer to an October blue moon as a hunter’s moon because animals had fattened up for the winter when people needed to maximize the amount of stored food (1). We feel like investing in 2020 and 2021 will be like hunting all night in the freezing cold under a hunter’s moon. We expect to feel quite uncomfortable and tired most of the time, but the potential payoffs have been bigger than usual. We will stick to the processes and techniques that have worked through the decades, while constantly trying to recalibrate and refine them for the current environment.
Please touch base with us if you would like to discuss the pandemic or the markets, or to evaluate your financial plan.
Redmond Asset Management, LLC JANUARY 2021