The last 8 weeks have been normal. Let's just get that out there so we don't ruffle any more feathers than completely necessary. Yes, the chop, the anxiety, the two steps forward, 1.5 steps back - the "uh-oh, what about xyz..." syndrome is all part of a perfectly normal investing landscape.Read More
Oh wait, the bulls are gone already. They left, vanished, vaporized almost overnight. Took them three years to get here and three weeks to go back into hiding.
Let it be a lesson to the jackpot experts who constantly sift through the rubble of life to show their brilliance by highlighting all that is wrong with the world. Still further to those who fill our airwaves with the proverbial - let me see - what is the word I am looking for - yes, garbage, sold as "expertise" in the constant effort to be the guy who calls the next "Armageddon Event."Read More
Indeed - it's all flooding back into our systems. Almost everything is bad news again.
Call me a broken record if you must - but this is good. Real good (see Barbell Economy Portfolio updates below - feel free to email with any questions.).
Rates, Trump, politics, race, sex, Trump, earnings, Trump, trade wars, Trump, North Korea, Trump, Russia, Trump, Academy Awards and Hollywood, Trump.
Um, I suspect you get the drift.
It never ceases to amaze me that we cannot function with everything just being ok for long at all these days.
Sentiment shows it - media shows it - chatter, comments, calls and emails show it.Read More
Likewise, many are flush with good feelings in March and April - if nothing more than to get away from February LOL). The days get longer (clocks spring forward on March 11), the snow starts melting, as do your heating bills. Flowers begin to bloom, the gray falls away - and then - offices and teams around the country become transfixed with rivalries in March Madness basketball pools. Right afterward - April 15 - and the deadline for funding various pension plans.
Lest we forget, we will also soon mark what many perceive as the ninth anniversary of the start of this bull market - Monday, March 9, 2009. All too many of those pundits also bay to the moon that the bull market is getting "long in the tooth" or senile - or worse, on its last leg - in the ninth inning.Read More
A little history may help to start the week off. One can look back to years of returns and find that it is not abnormal at all to see a couple good years in market indices be followed by one that feels more like a pause. There is logic which backs this market structure up. It relates to the simple idea that as increases in market values finally sink in after the terror of 2008-2009 only slightly wears off - rates feel some upward pressure. This is NOT a bad thing - but it does cause an equilibrium problem on a short-term basis.Read More
So often in life, our minds are taken away by the "shiny-object syndrome". The biggest or scariest thing takes up our view and we tend to miss all the breadcrumbs along the way.
That is happening right now. Recent market action has seen the return of volatility. Too often, investors think volatility is risk. In reality, volatility is perfectly normal. It has unfolded - at times - since the beginning of trading.
Come on - I am just playing with you. Seriously, when you read that title of the morning note in your subject line, I have a hunch your heart fluttered - the nightmares of old corrections came rushing back - fears of market plunges dancing in our heads.
Not even close my friend.Read More
In a matter of days, fears have erupted and become totally focused on inflation.
Mind you, we have lived in a world of highly deflationary pressures for years. The fact that rates have "suddenly" begun to rise have been used as an excuse to claim that the inflation monster is back.
It isn't - and this worry too shall pass.Read More
What a 10-day stretch huh? We went from the first month of investors finally coming out of their bomb-shelters, with fears of a repeat of 2008-2009 slowly beginning to recede (only slightly mind you), piling into those wonderful, passive, fix-all-ills ETF channels and then - BANG.
It took three years for the AAII bullish sentiment to breach a majority - 50% of the crowd.Read More
Fox 2 Detroit's Let it Rip discusses how the tax changes will benefit us, whether we should throw a parade for veterans, and how this is affecting the market.Read More
For well over the last two years, for several times a week, I had copied a line into the morning note. "Pray for a correction." Each time, I stated that it would drive a huge new bearish viewpoint, scare the masses away again, create significant values, drive everyone to doubt their convictions, cause thousands of advisors to be certain the end is near again - and then....the surge in fear would end. The stage would be set for a brand new leg in the powerful economic cycle of change ahead.
Now, the correction and setbacks are here - and in less than 60 hours of trading (10 trading days) - almost the entire perspective has changed.Read More
So why? The simple answer is we went up a good deal - for a lengthy time. A rest is normal. What is not normal - but at the same time inescapable - is the emotional reaction of the crowd.
Consider it was only recently (week three of December) that we broke a 3-year record of not seeing a majority reading (above 50%) in the AAII bullish sentiment data. Three years running folks - where the crowd just could not get bullish even as markets basically rose. Yet, here we are - the moment something goes red in a significant way - and the crowd looks to exit very, very quickly.
The reason for the panic attack on Friday was not for any bad news. It was, again, over something which not only is not yet existent - but, importantly - will be good news if it actually arises: wage growth inflation.
The crowd has been told for so long it is wise to fear wage growth, that we have apparently lost our ability to actually dissect the question with logic and not emotion.Read More
Man, I know I like praying for a correction - and I love getting deals - but I sure hate watching red ink. Here is the thing. It is very typical for a market which has risen hard into the heaviest part of the earnings season to then have a hiccup or two - or six - during the busiest weeks of the earnings season.
This week and next week are the two busiest of the Q417 earnings season and they represent the highest level of market capitalization in the list of companies reporting. Hence, they also represent the largest numbers of clashing opinions and short-term reactions to the earnings data. A real shocker huh?
Besides, after the first few weeks of this year - we really do need to see things cool off a bit. While I cannot bring out a crystal ball, seeing the markets go straight up for extended periods of time does not often end well.
This pause will do us all good in the end.Read More
I must tell you, it never gets boring. With the proper perspective, there is always good news somewhere. And for the patient, long-term investor - well - I must say, the news rarely gets better than we are seeing unfold for the years ahead.
Yep, that makes me a tad bit nervous as long-time readers know I like it better when everything feels bad LOL. You can be assured there is a correction out there somewhere but our theme remains the same - bring it on!
It will be a good thing, not a bad thing.Read More
Hate to tell you this - but we have been dead wrong. The pace of earnings dropping to the bottom line is happening far faster than even we expected - and I am pretty sure we had a fairly rosy view of things.
Some may think that is bad - just remember, you heard it here first (6,712 times), this game is just getting started.
Just because emotions can cloud memories, I repeat that this does NOT mean every week, month, quarter or even year is "better." Long-term trends include bad windows within them - sometimes several. Indeed I fully expect some type of ugliness will interrupt this party at some stage.Read More
Guess what? Things are getting better. Mind you, that does not mean everyday, week, month, quarter or year is "better." Long-term trends include bad windows within them - sometimes several.
Stop Me If You've Heard This One...
I cannot believe it but this headline awaits readers on financial sites today:
"Traders Skittish as Government Shutdown Looms"
The pictures and images are grim - eliciting that type of cringe from readers that media producers look for today in their click-revenue-producing stats. That's what it is about right? You do know that yes? Clicks. Ads. Links. Money.Read More
It's getting pretty dangerous to be in the good news business. There is a real sense that if you tell someone that the good tidings have just begun - well, you just don't understand. If you explain, logically, that history is pretty basic on this stuff - the important stuff - the driver of real economic activity, well, you are being imprudent and not aware of the real risks out there.
Let's be clear - there are always real risks. Every moment you invest for a gain, there is risk. If you expect any return, ever, there is a risk. Never let that element of knowledge leave your mind. But make sure this following element sits right next to that one:
It has been that way since the beginning of time. It will never cease to be that way.Read More
So I already noted several times that this earnings season will be one for the record books. Based on the first few to trickle in - let me tell you my gut feeling:
A ton of people still don't get it.
They don't get how good this economy is going to become.
They don't get that a bunch of tour buses are starting to show up in the parking lot.
They don't get that the freeway exit is backed up because there is a line of tour buses stretching - oh, maybe 10 to 15 years long.Read More