Category: Morning Note

“Train yourself to let go of everything you fear to lose.” 

— Yoda

Good Afternoon,

I will keep this one short today – with a focus on sentiment.

The expected history of September has not disappointed.  Chop and churn has been the name of the game.  Seems like good news is just not good news anymore – no matter where you look.  All of last week down – and this week has been up and down the entire time.

If, by chance, you are feeling any stress about this – I have 4 words for you:  snap out of it, soon.

“Based on my own personal experience – both as an investor in recent years and an expert witness in years past – rarely do more than three or four variables really count. Everything else is noise.”

~Martin Whitman

Good Afternoon,

The summer haze is taking its time in clearing.  Volumes remain lower than normal and air pockets are evident as seen yesterday and on Friday.  The “concerns” are flying in the headlines as we go from one problem to another.  The milli-second that the inflation data came in lighter than expected, overnight retail sales data from China came in very light as well.

This morning, bright and early, the headlines were filled with the “Slowdown in China” and any stock selling anything retail in China is getting shellacked today.  Classic examples of the mental mayhem which takes place as markets wait for the real data that moves elements along.

There, I am afraid we will watch these antics until we get to the later stages of September and early October.  Then, we will have set the stage exactly as a long-term investor would prefer it:  kicking off the next earnings season with very low expectations and concerns about the ability to continue forward.  This tends to be vastly better than rallying with excitement into the opening days of Q3 reports.

A Review

As we covered throughout summer, trade ranges serve a purpose.  They build a foundation for what’s next.  The longer they last and get tested, the better the breakout is afterward.   This summer, while no significant “swoon” was forced upon us, the internal churn was evident for anyone watching.

“Compound interest is the eighth wonder of the world. He who understands it, earns it.

He who doesn’t, pays it.”

— Albert Einstein

Good Morning,

I mean he wasn’t the sharpest nail in the drawer but heck, he had some good quotes : )

Seriously, hope you had a great weekend as the summer haze is just about officially burned off.

Back to the grind as they say – and wow is this mountain ahead a big one.  May indeed be one for the record books as it unfolds.  The media was all over the “come back from summer” opening week, with markets down all 5 days and an ugly flurry into the finish late Friday afternoon.

The headlines were almost comical at times:

“Market Dives for 5 Days Straight”

“Selling Defies Effort to Reverse Market Tailspin”

“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

~Benjamin Graham

Good Morning,

I am always amazed over my nearly 40 years at this, when I watch periods of time when so much stress and angst is being felt while the fundamental data shatters records.

The latest?  JOLTs – the job openings report that is akin to the back-order pipeline in the world of manufacturing and heavy industry.  Record job openings suggest record future investment and Capex.   Well guess what?  The latest JOLTs report is a record-setter for sure.

“Once you start down the dark path, forever will it dominate your destiny. Consume you, it will.”

– Yoda

Good Morning,

Hey – we made it!  We got through the perilous, dangerous, chilling, hazardous, risk-filled summer of 2021.  Now, we face the perilous, dangerous, chilling, hazardous, risk-filled last 4 months of 2021.  You get the drift.

Nothing changes on this pathway from the media’s perspective.  There will be no good news.  There will be no “let up” is “the dangers facing us.”  Good Lord, they are all starting to blend together.  Re-read the opening quote today – it will help.

“The big money is not in the buying or the selling, but in the waiting.”

~Charlie Munger

Good Morning,

Ah yes, for sure.  Another variant is lurking, catching the CDC’s attention just as the Delta variant caps out.  It’s called “mu” by officials and we can be assured more news is coming.

So is the end of summer 2021.

Such a great one for the record books but sort of a “ho-hum” from the audience.  Yea, so what seems to be the response.

Records were shattered everywhere.  It’s all because of the Fed they say.  This is the same crowd that said “it was all because of the Fed” as we came out of the Great Recession back in late 2009.  They said it was just QE.  They said is was DC.  They said it was only for the rich.  They said it was rigged.

They said all of that about 400% ago.

Expect the same reference 12 years from now…simple math…very, very difficult waiting.

Can you just imagine how much crap we are going to have to wade through in the next 400% upswing(s)?

Lots of problems, quite a few disasters, at least a couple which will qualify for “Armageddon” coverage and many more potholes just to screw things up at times.

Count on it.

“Governments never learn.  Only people learn.”

– Milton Friedman

Good Morning,

What a summer. huh?  So much for the terrible (fill in the blank) and its aftermath.  Summer has another week or two to go, not officially, but by market haziness and dreadfully low volumes.  For the second summer in a row, there was nothing one could refer to as a summer swoon.  Sure there were those two really ugly days – but a “swoon?”  Nah – nothing to report there.

The earnings season for Q2 became so good that it almost got lost in reporting.  There were so few misses that the media needed to find something else to chatter about.  In the end?  Well, in the end, no record was left standing.  The “comeback” from a global pandemic shutdown continues to weave its way into the record books, shattering anything most of the crowd expected.

Margins are robust – we expect them to expand another 20%+ plus over the next 24 months, from 11.5% or so in 2021 to over 14% by 2023.  Blame technology for that – and layers and layers of “new ways to do things” in every single industry or service area of the US economy.  The momentum is significant.

“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”

~ Warren Buffett

Good Afternoon.

Here is hoping you and yours are set to have a wonderfully enjoyable and relaxing weekend for sure.

As the haze thickens more in the next couple weeks and then slowly fades away, soon we will be back to worrying about all sorts of things.  Visions of nasty shopping season headlines are already dancing in my head. The joy of it all…

“Sources tell us that shoppers spent 5.3% less than last year between 10:00am and 2:40pm on November 14th.”

I digress – but alas, you get the point.

“The stock market is a device for transferring money from the impatient to the patient.”

– Warren Buffett

Good Afternoon,

If I’ve said it once, I have said it 4.218 billion times – summer stinks in the stock market. : )  And August is almost always the more frustrating month.  And here we are – staring into the teeth of the summer swoon.

It has taken a mere few hours and just 400 or so points – nothing to a long-term investment plan – to cut the bullish sentiment in the Fear and Greed Index from 49 to 33.  That is a 32% drop for a move in the market of less than 1.5%.