To SMA clients and friends of Vailshire Capital Management:
- Conditions for an ongoing bullcrab market (sideways chop near local highs) persist for the time-being
- I remain of the opinion that a recession has been averted for the time-being, as both the US and most international business and credit cycles apparently have bottomed… and are just starting to slowly grind higher
- Although macroeconomic conditions are not (yet) wildly bullish for risk assets and bitcoin, they are quite far from being bearish
Current Market Conditions
Sideways Chop
Happy Easter weekend from Colorado!
Conditions for an ongoing bullcrab market (sideways chop near local highs) persist for the time-being.
Inflation remains higher than most people grew accustomed to in the 2010s, while economic growth is better than many had anticipated just a year ago. Long-term interest rates, which reflect future growth and inflation expectations, continue to chop sideways in the 4-5% range… and I expect this to continue for the time-being.
Thanks, in part, to massive fiscal spending, the US economy never descended into a full-fledged recession. I remain of the opinion that a recession has been averted for the time-being, as both the US and most international business and credit cycles apparently have bottomed… and are just starting to slowly grind higher.
Although macroeconomic conditions are not (yet) wildly bullish for risk assets and bitcoin, they are quite far from being bearish. For those who are interested, I posted my updated thoughts on US Net Liquidity and Global M2 money supply earlier today on X/Twitter (see below).
With above-mentioned trends in mind, we remain steadfast in our generally bullish positioning across Vailshire separately managed account portfolios.
US Net Liquidity and Global M2 Update (see X/Twitter post, below). Given the ongoing sideways trend near local highs in both “liquidity” indicators, I expect ongoing sideways chop near local highs (bullcrab price behavior) for both US and global assets.
Strategies for Vailshire’s SMAs
No significant strategy changes were made to Vailshire separately managed account portfolios during the month of March.
Our larger-than-most-financial-advisor allocations to bitcoin proxies have given us a serious leg up in performance over the past several months. That said, I have tempered expectations for overall portfolio performance over the next several months… as continued appreciation of risk assets and bitcoin is simply not supported by global M2 trends.
I would not be surprised to see a meaningful pullback (at worst) or ongoing choppy sideways price action (at best) in our portfolios for the foreseeable future. As such, I would encourage you (dear Vailshire client) to temper your expectations accordingly.
Once liquidity transitions from choppy sideways to a true tailwind–which I anticipate to occur in earnest during the summer months–then I expect that the next major leg higher begins for risk assets and, especially, bitcoin.
Based on my ongoing study of the Bitcoin monetary network and its past cycles, I still remain highly optimistic about the coming 18-20 months. These are obviously just educated guesses, but I maintain bitcoin price targets of $125,000 by Christmas 2024 and $475,000 by 4Q 2025… both of which may prove to be conservative. (Note that past performance is not indicative of future returns.)
As I wrote in last month’s update:
In light of these expectations, I am strongly inclined to allow our winning bitcoin proxy positions to continue to run, rather than traditional methods of “taking profits.” Doing so at this point would be akin to trimming the flowers in the garden, while watering the weeds, as the old saying goes.
We have a good thing going… let’s let it continue to play out.
——–
Our Vailshire SMA portfolios remain allocated towards a 40% equity, 40% sound money, and 20% fixed income structure:
Vailshire’s Aggressive separately managed accounts (SMAs) are allocated as follows (current starter % position size):
EQUITIES (40%)
- 2% AAPL
- 2% ADBE
- 2% AMZN
- 2% AVGO
- 2% AZO
- 2% BRK.B
- 2% GOOGL
- 2% LLY
- 2% MA
- 2% MELI
- 2% MSCI
- 2% MSFT
- 2% NVDA
- 2% NVR
- 2% SHOP
- 2% SQ
- 2% TPL
- 2% TSLA
- 2% TT
- 2% V
SOUND MONEY (40%)
- 15% FBTC (spot bitcoin ETF)
- 5% FNV (gold royalty)
- 15% MSTR (bitcoin proxy)
- 2.5% WGMI (bitcoin miner ETF)
- 2.5% cash
FIXED INCOME (20%)
- 5% NLY
- 15% OCSL
Vailshire’s Moderate separately managed accounts (SMAs) are allocated as follows (current starter % position size):
EQUITIES (40%)
- 2% AAPL
- 2% ADBE
- 2% AMZN
- 2% AVGO
- 2% AZO
- 2% BRK.B
- 2% GOOGL
- 2% LLY
- 2% MA
- 2% MELI
- 2% MSCI
- 2% MSFT
- 2% NVDA
- 2% NVR
- 2% SHOP
- 2% SQ
- 2% TPL
- 2% TSLA
- 2% TT
- 2% V
SOUND MONEY (40%)
- 10% FBTC (spot bitcoin ETF)
- 10% FNV (gold royalty)
- 10% MSTR (bitcoin proxy)
- 2.5% WGMI (bitcoin miner ETF)
- 7.5% cash
FIXED INCOME (20%)
- 5% NLY
- 15% OCSL
Vailshire’s Conservative separately managed accounts (SMAs) are long-only and are allocated as follows (current starter % position size):
EQUITIES (40%)
- 2% AAPL
- 2% ADBE
- 2% AMZN
- 2% AVGO
- 2% AZO
- 2% BRK.B
- 2% GOOGL
- 2% LLY
- 2% MA
- 2% MELI
- 2% MSCI
- 2% MSFT
- 2% NVDA
- 2% NVR
- 2% SHOP
- 2% SQ
- 2% TPL
- 2% TSLA
- 2% TT
- 2% V
SOUND MONEY (40%)
- 10% BLOK (bitcoin proxy ETF)
- 12.5% FNV (gold royalty)
- 7.5% MSTR (bitcoin proxy)
- 10% cash
FIXED INCOME (20%)
- 5% NLY
- 15% OCSL
Vailshire’s Ultra Conservative separately managed accounts (SMAs) are long-only and are allocated as follows (current starter % position size):
EQUITIES (40%)
- 2% AAPL
- 2% ADBE
- 2% AMZN
- 2% AVGO
- 2% AZO
- 2% BRK.B
- 2% GOOGL
- 2% LMT
- 2% MA
- 2% MELI
- 2% MSCI
- 2% MSFT
- 2% NVDA
- 2% NVR
- 2% SHOP
- 2% SQ
- 2% TPL
- 2% TSLA
- 2% TT
- 2% V
SOUND MONEY (40%)
- 10% FBTC (spot bitcoin ETF)
- 15% FNV (gold royalty)
- 2.5% MSTR (bitcoin proxy)
- 12.5% cash
FIXED INCOME (20%)
- 5% NLY
- 15% OCSL
Vailshire’s Bitcoin Proxy separately managed accounts (SMAs) are allocated as follows (current starter % position size):
- 49% FBTC (spot bitcoin ETF)
- 49% MSTR (bitcoin proxy)
- 2% cash
If you are a Vailshire client, feel free to log in to your account(s) at Interactive Brokers and see how your own portfolios are positioned. (It’s a good idea to log in and review your account(s) at least quarterly, just to make sure your settings and demographics are up to date.)
Conclusion
Vailshire’s SMAs… Happily Backed by Bitcoin
A recent X/Twitter post (above), describing my educated price guesses for bitcoin over the coming 18-20 months. Based on these targets, we continue to be happy holders of bitcoin proxies, though the volatility often takes courage to endure!
While not much has changed from a macroeconomic perspective, we continue to benefit from our long-term investor/saver mentality across Vailshire’s separately managed account portfolios.
We may experience sideways choppy (aka “bullcrabby”) price action over the coming months and quarters before the next bull market for risk assets and bitcoin begins in earnest.
As opportunities arise in the form of lower prices, we may take advantage of such drawdowns to bolster our portfolios for anticipated future price gains across world-class assets.
I believe that the coming months will provide a great opportunity to put new cash to work within our portfolios.
If you have friends or family members who may also benefit from Vailshire’s unique investment strategies and portfolio management, I would be honored by a referral!
Living well and investing wisely with you,
Jeff Ross, MD/MBA