Gabriel Report

“History does not repeat itself...but if often rhymes” - attributed to Mark Twain      In the decade leading up to the crisis the Federal Reserve cut interest rates, and unemployment descended to near-record lows.  At the same time corporate debt surged, and the U.S. pursued protectionist tariffs.  Then the Great Depression occurred.                The 1920s uncannily parallel our past decade, therefore it is instructive to compare today’s COVID Crisis to the Great Depression (beginning in 1929).  We will also compare it to the recent Great Recession (beginning in 2007).  The table below reveals that the COVID Crisis is more damaging to the Global and United States economy than the Great Recession, and of a similar magnitude to the Great Depression:  1 No reliable annual worldwide data exists for the Great Depression. Source for World Product during the other periods:  Intern...

  On April 1st 2020 the Dow completed its worst first quarter in 124 years .  You needn’t have been a fool to lose significant money (the Gabriel fund profited 11% the first quarter 2020).  The market remains overvalued, and I anticipate the S&P 500 will revisit March’s low around 2200.  The model is Bearish for April 2020.      Calling a market bottom is very difficult, and the S&P 500 is up about 13% since March 22nd 2020.   Source: Yahoo Finance This resurgence is in response to the federal reserve lowering interest rates to 0%, and a historically large economic stimulus plan.  While both of these are bullish, consider market valuations.  The last time market valuations were as high as recent ( Buffets Ratio reached 155% in February 2020) was prior to the Dot.com Crash (Buffets Ratio reached 150% in January 2000).  Buffets Ratio dropped to 71% before the market hit bottom in 2002....

     You’re the defensive coordinator for an NFL team playing defense.  It’s 3rd down with 3 yards to go.  Will you defend against a run play, or a pass play?        In the long run you would be wise to defend against a pass play; since 2008, NFL teams have passed 55.27% of the time when faced with 3rd down and three yards or less to go.  Researchers developed a model that is able to further predict whether a team will run or pass under similar circumstances with 76% accuracy when taking into consideration factors like the number of seconds left in the half, the score differential, the yard-line the ball is placed, and whether a team is in shotgun or not.  This model does not always predict the correct play, but it would be foolish to ignore this (or similar models) when calling NFL plays.        I developed a model for investing that takes into consideration factors like market valuatio...