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With the onset of the mini-banking crisis back in early March and the continuous Sturm und Drang on a soon-to-materialize (maybe) recession, many investors decided to head for the hills of safe haven investments... flights to safety. Except for Treasuries, most of the alternatives above seem to be anything but safe havens. I thought it might be helpful to offer you a few counterpoints on the non-Treasuries listed above.

When the Silicon Valley Bank (OTC:SIVBQ) crisis emerged in March, gold was trading at about the same price it was trading 11 years ago, $1818.00 per ounce (March 7, 2023). By April 12, as flight-to-safety buyers poured in and the COMEX price hit $2055.00. It was trading around $2000.00 as I wrote this post. If you had moved money into gold as a safe haven in early March, youd be up about five percent. If you had been persuaded to buy gold in 2012, when things were much scarier after the financial crisis and Great Recession, and held on because you believed the gloom and doomers daily preaching that gold was the best investment for hard times, my bet is you would be mighty unhappy, as the S&P 500 had, at its peak, quadrupled over the same time period. You may say that I am cherry-picking my data. This is but one decade in many decades. I will answer that assertion with academic work done by Jeremy Siegel in his book Stocks For The Long Run. Siegels work indicated that one dollar invested gold back in 1812 would be worth, on an inflation-adjusted basis in 2012, $4.52. Over the same 200 years, one dollar invested in stocks would have been worth $704,999.00.

I thought we had pretty well broken that fever in last years technology rout that saw the Nasdaq Composite drop 38% from its all-time high (16212) in November 2021. It closed at 10089 on October 12, 2022. Todays close at 12142 gets back 20% but is still down 25% from the 2021 high. Since the banking scare, the index has rallied from 11138 back to 12142 - all, I believe, in reaction to the recession that is now really (maybe really) coming due to an SVB-induced tightening of credit. The rationale: tech companies are so profitable, they dont need to borrow to grow. They are bulletproof. Set em and forget em. What you pay is of no concern... buy em! Ask Cathie Wood how that approach has worked out.

The terms "Nifty Fifty" and Covid playbook essentially describe the tactics designed to give investors outperformance during difficult economic times. Everybody knows bad times are ahead (right?) but they need to be in the market, so they jettison their economically sensitive names and beef up their holdings of high-quality dependable growth stocks. The jettisoning includes small-cap companies with leverage and companies in need of financing. This happened in the early '70s with the "Nifties" and hit again when Covid hit. Our current mini-bank crisis has brought another wave. Since March 9, the Nasdaq Composite index has risen from 11138 to 12142, up 9%. During the same period, the Russell 2000 small-cap index has declined over 13% from its peak on March 2, 2023.

An example

META ($238.56), the stock formerly know as Facebook, reported the following results as analyzed in this excerpt from CNBCs website:

KEY POINTS

With results largely achieved by dramatic cost-cutting efforts after years of unbridled expansion, the stock closed up 15%.

On the other hand Caterpillar (CAT - closed April 27 at $214.33, $1.86), crushes earnings, real earnings and revenue growth, but the stock does not budge (actually it went down). According to Barrons... Economic angst is too high.

I just shake my head.

Let me start by saying I dont now and never have understood bitcoin. The only reasons I can think of for anyone to buy bitcoin is because they believe that someone else will take it off their hands at a later date at a higher price (greater fool theory) or they need to do something nefarious with their cash. However, in these uncertain times, because bitcoin is so secretive and so supposedly secure, it seems some folks may be moving their not-so-secure FDIC-insured bank deposits to the safety of a bitcoin or coins. Since March 9, near the beginning of the bank mini-crisis, bitcoin has risen in value from $19985.00 to over $30,000, up over 50%. Early Friday morning March 28, it is trading around $29500.00. That would be down from an all-time high of $65,000.00 in November of 2021.

Again, I just shake my head.

While we wait for the recession that never seems to come, it can be pretty frustrating watching the craziness we addressed above. Buying and owning todays also-rans in small-cap, value and economically sensitive names will pay off handsomely. Dont let em scare your of your stocks.

Whats your take?

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Flights To Safety: Treasuries, Gold, Nasdaq (?) And Bitcoin (?) - Seeking Alpha