I have always loved Boston. My first recollection of the city was when my parents and I used to fly into it spend a night, or two, and then head for our house in Nantucket. Boy, I wish I still had that house. In later life we use to visit the city to see portfolio managers with Fidelity of particular interest.
Psychology is the reason most investors fail to keep up with the markets, and why contrarian strategies have turned in consistently superior performance over time. This same inability to understand psychology is often why academics don’t incorporate its use and instead stay with what may be flawed modern portfolio theory.
Acknowledging that losses are part of business is one thing; taking and accepting those losses in the markets is something else entirely.
Recently, the markets have been gyrating in a narrow range. Again, according to the book One Way Pockets.
Our work suggests there is still a chance for the S&P 500 (SPX/2992.07) to trade out to new all-time highs (ATHs). However, the first part of October is showing up as problematic on a trading basis and potentially before then. Well, “potentially before then” began yesterday with the revelation that Speaker Nancy Pelosi was proceeding with a formal impeachment inquiry against President Trump.
Emotions run rampant before the uncertainty of floating, fluctuating, often violent and volatile markets. Constantly discounting prices are fickle and full of surprises. Disorder is usually the norm.
I have been reading Shad Rowe’s prose since the 1970s when he wrote a column for Forbes’s magazine. More recently Shad and I met in his Dallas office to discuss the markets, stocks and his investment style. That was about six or seven years ago.
Zebras have the same problem as institutional portfolio managers. First, both seek profits. For portfolio managers, above average performance; for zebras, fresh grass. Secondly, both dislike risk. Portfolio managers can get fired; zebras can get eaten by lions. Third, both move in herds.
The fact that the equity markets are rallying in the face of this week’s negative “energy blast” is highly bullish.
Desperately Seeking Susan is a 1985 American comedy-drama film. We recalled the movie, and its title, while talking to a 70-year-old contemporary who told us that in this low interest rate environment he is, “Desperately seeking savings.”
We were surprised by last Friday’s stock market action. Of course, we did not anticipate the escalation of tariffs, or the Tweet Triage. Friday’s plunge was the forth test of the August lows between 2822 and 2835. To us this looks like a search for a bottom, yet Friday’s drop is a bit concerning.
Last week on CNBC I stated that maybe what we have is a new toolbox; but nobody knows what new tool to use for analyzing the economy, stock market, bond market, etc. Our friend, CNBC’s uber-smart Steve Liesman, hinted at this point in our interview, but I do not think many folks picked up on it, and it is a very important point.
What I really think has happened is that given the years of quantitative easing, exceptionally low interest rates, low inflation, etc. what we have is a new “toolbox” and we do not know what “tools” to use in quantifying the current economic, bond market, and stock market environments.
Chapter 1 in the seminal book “The Intelligent Investor” by Benjamin Graham is titled “Investment versus Speculation"
So, we hate to keep issuing these Trading Flashes, but given the stock market action since Wednesday 7-31-19 it seems such comments are warrened.
Have we changed? Have circumstances changed? Our answer was, “Maybe.” With what the PBOC did in basically resetting the U.S. Dollar/ Renminbi exchange rate, it suggests the trade war is going to go on for a lot longer than most anticipated, including us.
Last week many traders, not investors, became “trapped” in the equity markets as most of the major averages had their worst week of the year. I wish we could say we called the downturn, but all we thought would happen was a mild pullback.
"Ich bin ein Berliner" (German pronunciation: [ˈʔɪç ˈbɪn ʔaɪn bɛɐ̯ˈliːnɐ], "I am a Berliner") is a well-known quote from a speech by United States President John F. Kennedy given on June 26, 1963, in West Berlin. It is widely regarded as the best-known speech of the Cold War and the most famous anti-communist speech.
I was talking to my friend, and 60-year stock market veteran, Jim Rivenes (Raymond James) last week and somehow, we got on the subject about Edward Thorp an individual Jim use to have as a client. It reminded me of a report I wrote in 2005. I like this report.
I entered this business in 1971 on a trading desk in New York city. Since then I have been a trade desk manager, a retail stock broker, branch manager, analyst, portfolio manager, Director of Research at five different firms, and head of Capital Markets at three firms. As such, I used to do reviews on the analysts.
Greetings from Montréal one of my favorite cities in the World. The climes here are cooler than in Florida and the weather is perfect, which is a nice respite from Florida’s heat and humidity. I am here to see some institutional accounts and speak at an event in one of my favorite restaurants on Peel Street...
Overbought means an extended price move to the upside; oversold to the downside. When price reaches these extreme levels, a reversal is possible. The Relative Strength Index (RSI) can be used to confirm a reversal.
“Don’t tell me WHAT to buy, tell me WHEN to buy” is an old stock market “saw” that has survived the test of time. The reason it’s true is because a rising tide tends to lift all ships.
This morning, however, we changed the name from The Big Chill to The Big Stall because on June 3, 2019 we issued a “Trading Flash” stating that we though a trading bottom was being formed. At the time the S&P 500 (SPX/2886.98) was trading at ~2729. Four sessions later, Thursday 6-6-19, the SPX was changing hands at 2852 and we scribed another “Trading Flash.”
Oops; as the stock market’s fore-reach carried the SPX some 50-points higher into Friday’s session.
Last week CWP’s founder and CEO, namely Kevin Simpson, accompanied me to my various haunts in New York City to meet some folks and do media “hits.” I will not bore you with the events of the entire week, but I will share with you what a typical day looked like.
The stock market priced in a long Trade War with China this week with a 1.5% decline in the S&P 500, at it’s low on Thursday. Or so they said on TV. In the old days, it would take a few days for information like that to become the consensus opinion.
Macro trends can run for a while, but they can also experience a quick end. Elections (Brexit, US Presidential Election) can cause the most powerful reversals in markets.
I turn to “Page Two” of my career after a wonderful experience at the venerable firm of Raymond James. I hope I have left Raymond James on the high road because I cannot tell you how much I appreciate the opportunities Tom James, and the firm, have afforded me over the last 20+ years, but it was time to move on.