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The Morning Note


Over the years, clients have come to greatly appreciate the insights passed along in the morning notes. They serve to light the pathway ahead – especially during the storms.

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Fueling Up

“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.

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Like Pounding Sand

“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.

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Swan Dive

“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”

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“Dusted”

“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.

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Hidden in The Shadows

“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.

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Happy Labor Day

“The biggest risk of all is not taking one.”  — Mellody Hobson   Good Morning, Just a quick note from all of us to you and yours:  Happy Labor Day…

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The End is Nigh

“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.

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Ending The Haze

“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.

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      Learn more about the Morning Note

      The purpose behind our “Morning Note” is different than typical newsletters.

      We don’t get lost in Wall Street jargon. Why? After nearly 40 years, we can tell you that “jargon” is what causes most of the mistakes investors make over time.

      The Morning Note helps our clients see through the constant fog driven by the media process. That process focuses on things which will – and are often intended – to scare you. If you are not scared, you won’t pay attention to what they say; if you don’t pay attention to what they say, they lose ad revenue. Simply put: it’s a business model – not news.

      Instead we focus on what we like to call “bread crumbs” along your pathway to your goals. You are your own “index” – not the S&P 500. Your goals, your interests and you and your families staying on your course. That requires a vastly more productive viewpoint. It requires we stand tall in the storms. It requires we remain patient and disciplined, while focusing on the long-term horizon ahead. The “bread crumbs” are designed to deliver your most valuable outcome – staying on your course. Many battles, setbacks and disasters await. Always have – always will.

      The theme of the Morning Note will allow one to always recognize this over-rising fact: When we started in this business, the DOW hovered at 950. It is well above that today. And – most important – every single thing we have been taught to be terrified of – has already unfolded, all while our country built unprecedented wealth. So one has two choices – fear today or be confident of tomorrow. The history of the United States is clear. We overcome, we build, we learn, we expand, we succeed, we lead. Sure, we mess it up at times – but know this: the data is clear that our best years are dead ahead.