This is the Jones Fund 3rd update and final update for 2020.
Results
Q4 results
Sep 30th
Dec 31st
$ change
% change
Jones Fund
$236,654.98
$272,517.41
+$35,862.43
+15.15%
S&P500
$3,363.00
$3,756.07
+$393.07
+11.69%
Difference
+3.47%
Total results
April 1st
Dec 24st
$ change
% change
Jones Fund
$200,000
$272,517.41*
+$72,517.41
+36.26%
S&P500
$2,470.50
$3,756.07
+$1,285.57
+52.04%
Difference
-16.60%
* We are currently at around $122,000 in cash.
I am very pleased with the 36% increase achieved this year!
Quick update on fund expansion
Unfortunately due to California regulatory laws, I’ve hit a few bumps in the road on formalizing the fund structure. This means that I won’t be accepting new investors at this point, but hopefully will have a better structure in place the end of by 2021 Q1.
The election and its consequences
This year has been historic for many reasons. We have a president who is still arguing that there was a corrupt election two months after polls closed. The general advice around investing is to avoid doing any short-term trades due to potential volatility in the market, and indeed, I avoided all trades for a month leading up to the official election.
While I believe that Joe Biden will be inaugurated and serve as our next president, it is difficult to understand how the market will react. In the short term, it has risen on every mention of the stimulus package and rose again when the stimulus package was signed. While this is great for immediate spending in the economy, it is also printing more money.
I mentioned in the Q3 report that we had a 37% increase in USD in circulation this year alone due to previous stimulus packages, and this package will add another $900 billion[1].
In addition, Biden has indicated that he plans on passing more stimulus once inaugurated.
It’s hard to imagine how an increase of this size won’t create massive inflation. Many professional fund managers have decided to buy gold as a method to hedge against this scenario. I suspect people are also using Bitcoin for the same reason(which recently hit a high of $29,000).
Trump has been calling this a V-shaped recovery, meaning the market went down and is recovering just as strongly. Biden has been calling it a K-shaped recovery, meaning that some markets have recovered but others are still crashing. I side with Biden due to my research in various industries.
We’re currently at a 10-year high in announced bankruptcies as of August 9th, as you can see in the following graph:
The horizon
"In the short run, the market is a voting machine but in the long run it is a weighing machine."
- Benjamin Graham
While I avoid trying to time the market, I do believe that the market will get back to rational prices at some point. When I look at the stretch between current market prices and the value it is producing, which can be seen in the following graph, you can see it is at its highest price by a long shot. This is also known at the“Buffett Indicator”.
Results
Quick update on fund expansion
The election and its consequences
The horizon