“The man who is a bear on the future of the United States will always go broke.”

– J.P. Morgan

Good Morning,

Well, there you go – the first 5 days of the year indeed created a positive result. Not a huge one mind you (roughly +.70% in the S&P500 per public records) – but in the green nonetheless. The Stock Trader’s Almanac suggest in their often quoted writings:

The Stock Trader’s Almanac studied the “first five days” phenomenon going back to 1950. When stocks finish that period higher, they noted: “theS&P 500has been positive 82% of the time at year-end with an average gain of 13.6%”, according to their calculations.

What can you do with that? Uh – nothing.

It serves little value other than some faint, vague “feeling” conjured up in the back of our minds whispering to us that “this means all is well….” Don’t fall for that please. Mind you, I am not suggesting anything terrible or negative – I am merely suggesting we recognize the past never guarantees the future.

A Quick Summary

Besides sketching out a small gain in markets, the first 5 days of 2020 have been rather busy. Let’s see – the China Trade War, oh wait, that’s done. The impeachment process – hmm, that’s still vague and heated. All of that though has been somewhat hampered by the new monster in town – Iran. According to some in the media, we are already at war!

Sorry, I have to chuckle. If this really is a war – and the first volley of weapons is any indication of effectiveness, I’d start pumping out those white flags pretty quickly were I them. But hey – that’s just me and I am a dummy when it comes to the war stuff.

My only hunch? I think we can count on the idea that the Holidays are over, the gloves are back off and the media war for your attention is in full swing – set only to get more cutting, more scary, more riveting with attacks, etc etc etc.

√ Work very hard to ignore most of it.

√ Yoda put it best: “Do or do not. There is no try.”

Scared to Death

One thing that is working for you is sentiment.

Even as we sit at all-time highs, with records being set in many different categories, the investor audience remains tense. Long-term investors with proper focus on their plan pathway ahead, dosed with a truckload of patience, will find this is an excellent piece of news – in our view.

Let’s see what the latest data, hot off the digital press at AAII, tells us:

Now think about this data for a moment. After a 21-month trade range, ending in late October ’19 with the breakout to new highs, one looks at this data and would readily expect the market may instead be in a bear market. Note the imbalance:

All-time highs – and 66.9% of the crowd is not bullish.

Many years from now, long-term investors focused on their goals and their path stand very high odds of being pleased with the idea that most of the crowd remains – shall we say – skittish at best, as the various oft-quoted Index numbers get larger and larger.

Meanwhile – Consumers are Solid

With record high incomes collectively – and the largest numbers employed in history, it should be no surprise that the retail sales data remain solid.

Don’t be too upset if there is a rest somewhere in here over the next few months. After all, we cannot Holiday shop all year long:

Shoes and cosmetics? Ahh yes, it appears that the guys finally got out to shop for Christmas – late as usual.

The Better News?

It seems they were also shopping for some larger items as the home buying side of the ledger remains on tilt.

Data show we are running at near record lows on inventory as Generation Y is just beginning the process of moving up and beginning to build their own families.

Doubt it? Try getting married in a nice spot. Call early though because the waiting list is a year ++ in most areas. The next stage of life is also beginning to show in the data as the “elephant’s footprints” are hard to hide. Lennar Homes released their latest yesterday:

I point out Lennar for a slightly different view into the prism. They are often seen as the “beginning home or first-home buyer” type builder, with a vast number of their communities serving the younger side of the market – i.e., first-time buyers – GenY.

And remember: this flow of people is just beginning to move into this bracket of life.

Paradigm Shift

A lot of chatter has been noted about 5G in recent quarters – as the technology is set to be relatively widespread by end of year 2020 and into 2021 and beyond.

This comment is not about 5G itself – but what the trickle down effect will be all about.

One thought: everything is going to change.

This technology is going to unleash elements we cannot even begin to define. Only in recent days and weeks have we just begun to see what chip speeds and AI programming are pushing into the pipeline of our lives on the VR side (Samsung, Azure and Apple all creating human-like bots).

Edge computing will push the envelope even further – the line between real and tech is set to get even fuzzier. How lucky are all of us to be living in such incredible times?

Think of the impact for just a moment:

The iPhone is a little over 10 years old. The Apple App store is a little over 7 years old. Yet – check out this release for the Holiday week at The App Store:

Don’t let the bullet points allow you to brush through it:

In one 24-hour period, $386 MILLION in apps were downloaded onto iPhones.

I am pretty sure “that is mind-blowing incredible!!!” is a vast understatement.

Here is another thought that will surely twist your brain while also giving you a sense of just how much the bears are missing and how blinding fears have become:

Consider the hundreds of millions of iPhones Apple has sold over the last decade.

Now – brace yourself:

Every – single – one – of – them will be “old” and slow when 5G is widespread. When it is widespread, if you don’t own a 5G-capable iPhone, you will find yourself on their buyers list.

And you thought $386MM in apps on New Year’s Day 2020 was a big record?

I get chills when I think of how many cool, life-changing, Star-Trek-type things we are all set to experience in the decade(s) ahead. Astonishing.

One more thing -pray for a correction.

Closing it Out…

The Barbell Economy™ ahead is driven by the two record setting generations of our time. We are all blessed to be living in these unique times.

This week, SpaceX launched a Falcon 9 rocket. It delivered 60 more satellites in an internet constellation around Earth – check it out(if the tape does not start at T-30 seconds for you, just scroll to 17:50 timestamp on the video link):

The Falcon arrived back on the mothership a little over 8 minutes later – after pushing the satellites into orbit 271 miles above Earth, hurtling along at a little over 25,000mph.

And this game is just beginning. Based on US demographics, the 2020’s and 2030’s are set to make the 1980’s and 1990’s (birthplace of the Baby Boomers Growth Phase) look like the JV team.

So, there is only one question left to think about…two actually:

√ Feeling Pessimistic or Optimistic?

√ Just standing on the sidelines or ready to get in the game?