Drink the Wine

We hope that you had a chance to read our latest Quarterly Letter – Be Your Own Master – The New Retirement.  

The key to saving enough to retire is in deferring consumption. We have always been more of a saver and working on Wall Street tended to help with deferring consumption as well. We would work all year and spend our salary but when the bonus came we just put it in the bank. This is why 401k’s work so well as a saving vehicle. We never have a chance to spend the money as it comes straight out of our pay check before we even have a chance to get our hands on it. People seem to be either spenders or savers. The “live for today” type vs. the “I had better save for a rainy day” type. I have always enjoyed money going into the bank much more than I have enjoyed money coming out so count me in the latter category. The dawn of 2019 came and we have found ourselves at the end of an era with one of our in-laws passing away. When we went to clean out the house we found some wine in the kitchen. It turns out that we had given a case of some special wine to the in laws a number of years ago. When we opened the wine we found the wine had spoiled. While this is may be more for the “Save for a Rainy Day” crowd we were reminded that when deferring consumption – don’t forget to take the time to drink the wine.

This was another dull week so that is a gift to the bulls. The longer that the bulls are able to hold things here and digest the gains of 2019 the more legitimate the advance becomes. There is a real chance of a melt up here as most professionals got left behind during the swoon of late 2018 and run higher in 2019. Most professionals sought to rent this rally as the idea that the lows of December would need to be tested – or so that is how the textbooks would draw things up. The Federal Reserve having changed its stance in January has investors chasing the market higher as performance has suffered and there is a real fear of missing out (FOMO) on any further rally.

We have had several clients note our large cash positions as we sold some significant equity longs in 2018 and early 2019. One thing to note here is that, while we have had a monster rally in 2019, cash has outperformed stocks over the last six months.

The market is approaching all time highs but with less exuberance than one would expect. 2019 has been a spectacular year so far so we don’t expect investors to press their bets. It might be better to let things play out on the economic and trade front while the market digests these big gains. The 200 DMA on the S&P 500 is at about 2766. That will be the first major line of support should stocks falter. There are lots of investors missing out on this rally so we expect any sell off to be met with buyers.


I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd  Blankfein

To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .



A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill


Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.

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