Do we truly need politicians (no less) to ensure fairness in international trade? (video)

Me listening to a conversion between two economists on CNBC this afternoon resulted in one of our staff having to suffer through yet another one of my rants on what I view to be THE most dangerous fallacy infecting the thinking of so many American citizens these days: that international trade needs to be somehow monitored and, alas, manipulated by politicians (no less) to ensure some level of "fairness".

Your Weekly Message: The FBI testing market support...

For this week's message I was originally going to chart for you the market last year at this time versus this year, as -- like today -- we were then staring down a pending Fed rate hike. However, today's interesting action in the wake of a news headline inspires a different conversation. I'll do that year on year comparison sometime within the next few days.

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In yesterday's video I mentioned that I suspected that the S&P 500 would break below its present trend line and test the 2120 (orange line below) level perhaps a few more times going forward. I also mentioned the 2100 level (horizontal white line below the orange) as maybe being a line in the sand:

Market Commentary: What does the data say about the consumer? (video)

Is it really as bad out there as some might have us think?

Bonus quote of the day...

Again, from Martin Pring:

Quote of the day...

Martin Pring, in his 2009 book The All Season Investor, speaks to the patience and discipline necessary to succeed in the market "over the long run".

This Week's Message: Infrastructure and the stock market...

My video commentary from Wednesday (watch it if you haven't yet) mostly sums up the message that present circumstances compel me to put forth. So, to end the week, I'll simply expand on one theme I noted in the video.

What do the markets think about our current state of affairs? (video)

Are you worried about what's to come? Let's see what the markets think:

"Population Stabilization" Hmm... Be careful what you ask for!

I bet some of you are familiar with the organization that calls itself "Californians for Population Stabilization". Hmm... interesting title! While, clearly, the title says it all, here's its stated mission:

Quote of the day...

No doubt some folks believe that we're on the verge of the proverbial going to hell in a hand basket and that the market is on the verge of collapse -- which are perpetually the beliefs of some of those folks (which is a good thing, as buyers need sellers) -- and of course stock prices are forever subject to whipsaws and draw downs (even/always during strong bull markets). But to the extent that the market is a discounting mechanism, as described below, its present intermediate and longer-term trends (chart below) do not support the fears of those perpetually fearful folks.

The following from John J. Murphy's great book Technical Analysis of Financial Markets speaks to the inherent risk in overthinking the market.

Quote of the day...

In a 1990 recorded debate on free trade and protectionism, The Frazier Institute's Michael Walker stated the following:

Eavesdropping on a conversation between a candidate and a campaign strategist... Or ... Skeletons Shmeletons!

Please, don't even think that the following doesn't apply equally to both candidates or any other politician for that matter. And please forgive me my cynicism...

This Week's Message: Uniqueness, and the trouble with trying to be right...

Regardless of one's level of education or achievement, every individual is subject to his/her unique, well, you name it, experiences, ego, biology, cultural scripting, prejudices, proclivities, etc. I often think about the geniuses who made a killing while lots of folks got killed during the great recession of 2008. Their amazing awareness and forethought (and, well, not to take anything away, luck) made them wealthy to the point where they can be wrong (unlucky) on virtually every next trade for the rest of their lives and never worry about how they'll fill the gas tanks in any of their yachts or pay the staff at any of their chalets (now I'm assuming that they impose loss limits on their speculations).

Market Commentary: Quicktake

Quote of the day...

You've heard me talk about things such as index futures and implied volatility when I'm offering perspective on what can get the market so jumpy from time to time. The following from John J. Murphy's classic Technical Analysis of the Financial Markets tells us why stock prices can move, violently at times, against underlying trends, and against our long-term positioning, without it remotely meaning that we're -- in the long-run -- on the wrong side of the market. I.e., futures traders do not enjoy the luxury of patience, and, thus, their reactions to price movements can actually exacerbate the extent of those movements:

Politically-Inconvenient Lessons of History, and Realities of Nature

I think we get so caught up in the inequality conversation that we lose sight of nature -- and of history. 

My personal history, my education, my scripting, my ego, etc., send me into the philosophical arms of Milton Friedman and others:

A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both. M. Friedman

Market Commentary: Quicktake (video)

Quote of the day...

The following from Pension Partners in August of 2014 has all-too-often been my observation of the individual investor's -- left to his/her own devices -- relationship to the stock market:

What Matters in Golf and Fishing, and Investing Too -- OR -- A River Runs Through Everything...

The hit movie A River Runs Through It provided a boost to the fly fishing industry of the early ‘90s. The slow motion scenes of a young Brad Pitt elegantly casting amid the serenity of Montana’s Blackfoot River had the world yearning for what had to be the ultimate peace of mind experience.

Quote of the day...

When the market does whatever it does tomorrow in reaction to the September jobs number -- or in early November in reaction to you know what, or in December in reaction to whatever the Fed does, or on and on -- before you start thinking about the share prices of your portfolio's positions, think about John Mihaljevic's wise words in his blog post from yesterday:

Market Commentary: Quicktake (video)

The charts in the video represent each respective sector's performance relative to the S&P 500 Index (as opposed to their raw performance). I.e., when the line increases the sector is outperforming the S&P, and vice versa:

Quote of the day X2...

In his classic work Economics in One Lesson (an accessible book that anyone desiring a clean, clear, unbiased view of how the economy works owes it to him/herself to read), Henry Hazlitt addressed the unequivocally pernicious overall impact of tariffs, and finds it paradoxical that anyone might find such commonsense paradoxical (which speaks to the power of political propaganda):

Today's TV Segment (video)

To clarify, real estate investment trusts and gold would be with utilities in terms of getting hit on the prospects for higher interest rates, where I say:

"utilities have been getting hit pretty hard, real estate investment trusts, gold -- and financials have been rallying. This is kind of a setup, in terms of sectors, that suggests to me that the market is discounting a fed rate increase".

 

Quote of the day...

In his September 27 blog post, Collaborative Fund's Morgan Howsel does a nice job describing the differences between bubbles and cycles, here's a snippet:

If you find an asset whose price looks expensive and is probably going to fall, you likely haven’t found a bubble. You’ve found capitalism. Excesses will correct, recover, and life will go on.

But that raises a question: If we know cycles are regular, why not try to get ahead of them by buying and selling before they turn?

Because regular does not mean predictable.

We can say, in hindsight, that you should have sold stocks in 1999 and repurchased them in 2002. We can say, in hindsight, that you should have gotten out of the market in 1929 and bought back in in 1932. But not one person in a million actually achieved this, which should make us question how feasible it is do it in the future. Look at the returns of macro hedge funds, which try to ride the ups and downs of cycles and bubbles. You would not wish them upon your worst enemy.

The investing world becomes a lot less scary when you view most booms and busts as cycles rather than bubbles. Will things ebb and flow, sometimes by a lot? Well, yeah. That’s what you signed up for as an investor. But is everything with a valuation above its historic average a civilization-shattering bubble? Not by a long shot.