“The Stock Market is a device for transferring money from the impatient to the patient….”

Warren Buffett

Good Morning,

I start with that interesting quote only because August was great. Why bring that up?

Because August is usually not great. Indeed, it is the home of most “summer swoons” and darnit all if we did not get one of those this year. For sure we have had a string of 5 solid months out of the panic waterfall selling of March and into early April. Too far too fast?

Well, in the near-term that is a tough call as we are dealing with events which have not been dealt with before. Let’s just say it sure would be helpful to get a pause, some setbacks and a few waves of fear rolling through again. If we can, that sets the stage for a solid run to the close of this historic – and terribly sad year.

Sorry all – but this is the most boring time of the year for “new data” – and the summer is just about up.

Rare Run – With August UP

While there have not been many occurrencessince WW2, Bespoke tells us that if we only look at post-WW2 five-month gains of 25%+, the next month was positive 73.1% of the time for an average gain of 1.71%. Over the next five months, the average gain has been very strong at +8.99% with positive returns 77% of the time.

So What About This Swoon?

I was wrong. After 38 summers, I presumed this summer would be like all the others — sloppy, boring and ending with a swoon – usually in August. Heck, we got the opposite and it is frustrating indeed for cash. The issue it sets up is a September which is often one of the more negative months of the year – based on history.

Everyone always thinks it is October since “crash history” puts a black mark on Octoberin the calendar.

Wrong – but recall, sloppy Septembers lead to solid year-end finishes:

Of course, this is just the DOW in the image above – only 30 stocks – but even that index is changing in a very big way with the shift to the powerful Gen Y / Tech influences.

The bottom line? Heading into September, let’s just consider that the calendaris a headwind for the next month or so. Throw in the politics and the media vitriol and you get the picture.

I still argue what I argued in August – it would be a good thing to get a setback. Like any setback, it will not be fun. It would, though, be healthy for the long-term trend of the market.

What Do Ya Know?

Manufacturing is not feeling too much pain right this moment. The data show a strong comeback in the latest ISM Manufacturing info – just released earlier today:

This sits nicely with the trend we have covered. There is a tremendous amount of inventory pipeline to refill. Many stores have aisles of empty shelves. That will work itself out over the next few quarters, ideally.

Dead Zone

For now, we need to recognize we are in a “dead period”. The only news will be ugly news. The next earnings season is 8 weeks out – and the only thing between now and then will be politically tinged. We just have to accept it. The calendar is just working a little bit against us as we head into the last official week of summer.

If I had to guess, I’d say the risks for some chop come in after everyone gets back from Labor Day break / the Summer Haze and says — “Oh my gosh, what is going to happen if XYZ wins?”

Sorry, I do not mean to be negative at all – but should a little setback set in, let’s embrace that as good news for the long haul. The tech rally has been – well, pretty damn hot – and one would surely rather see it be a little more steady.

Yes, I know – pretty crazy for someone who talked about tech running away with the show as the 2020’s dawn. But hey – the 2020’s have 9 years and 6 months left – so this game is just getting underway.

Remind Yourself of The Big Picture

Here it is…

And for a reminder of what we mean about all of that -take 5 minutes and watch what The Barbell Economy is set to do. <– click here

It is a refreshing view and is set to live on far longer than the virus. Take note: there are two short videos on the page link above. There is a password for the second video. It too is on the page – but just in case, the password isUpside2020.

Forget Looking for “Normal”

Don’t be stressed about when things will “get back to….”

Think “it’s all brand new” instead.

The New Economy is forming right before us. Sure, things will be different – some of those things vastly different. But suggesting we won’t win that battle and successfully rise to new heights has been a bad bet since our ancestors arrived here.

The best news of all? Wait until you get a load of the monster coming after this one. Good Lord. It will make this last 6 months look like a summer camp. And if it doesn’t, you won’t pay attention, the media addiction will fail, their revenues will fall – and the world will become a better place.

In the New Economy ahead, the long-term investor who can remain more focused on opportunity than peril, even as they live through that peril – will win. It’s a tough game – but that is why they never called it “fun.”

“Of all the liars in the world, sometimes the worst are our own fears.”

—Rudyard Kipling

In Summary

The 80’s and 90’s were the Boomer’s Decades.

The 2020’s and 2030’s are the Generation Y Decades – and the rocket-ship driving that expansion will be “everything tech” – including stuff we have not even dreamed of yet.

Grab your popcorn and tighten that seat belt. It’ll be the best Disney ride you’ve ever been on.

And remember this: The tougher you punch America, the higher she rebounds. It’s how we are all built – together.