I think of the trees and how simply they let go, let fall the riches of a season, how without grief (it seems) they can let go and go deep into their roots for renewal and sleep...
Imitate the trees. Learn to lose in order to recover, and remember that nothing stays the same for long, not even pain, psychic pain. Sit it out. Let it all pass. Let it go.
Day one; on the FED day there will be Over-Reaction.
Day two; there is usually Reaction-to-day-one-action.
Day three; action is the best indication on how participants digested the news
"When considering a new project or opportunity, one of the first questions to ask is, “How do I want to spend my days?”
Make as few choices as possible that violate your answer.
Many opportunities seem exciting but actually give you less of the life you want."
How are you going to get to your goal ? If you trade a short term move you give up the bigger move. If you go for the bigger move you will give up short term profits as you hold through pullbacks that never recover. There is no perfect plan. What is your plan ?
https://gisanddata.maps.arcgis.com/apps/dashboards/bda7594740fd40299423467b48e9ecf6
Not something an investor should discount.
Economic implications are pretty clear. Lower retail sales, home construction, fuel consumption. The lunar new year increases the risks of the virus spreading but it's also a holiday for many so in some ways the industrial and supply chain impacts are muted. If it keeps spreading, prevention efforts are going to get more intense and it's going to have a more meaningful impact on growth. The responses are similar to what they were a hundred years ago during the Spanish flu. Moreover, the better the control measures (curfews/travel bans/restrictions on public gatherings/limiting public transportation), the bigger the hit to growth. There are no easy choices.
Arguably America’s greatest inventor, Thomas Edison had an extraordinarily positive perception of life that greatly enhanced his ability as an inventor. When others might have been hopelessly discouraged after failing thousands of times in an attempt to develop an electric light, the great Edison simply viewed each unsuccessful experiment as the elimination of a solution that wouldn’t work, thereby moving him that much closer to a successful solution. We could all take a lesson from Edison. Stories abound about inventors who quit trying and gave up too soon or miners who struck gold just a few feet beyond where someone else quit digging. There are few obstacles in life that will not succumb to consistent, sustained, intelligent, positive action. When you are discouraged after you’ve failed at something, remember Edison’s 10,000 failures before he arrived at the solution that forever changed the world.
The inflation comparisons between November and February are very easy to beat - so inflation will surge further in these months. Nevertheless, inflation will most likely peak in Q1 22 - something to keep in mind and a reason to be stalking for buying opportunities in bonds.
Moreover, market participants seem to view this inflationary environment still as transitory. For example, the two-year breakeven -- which represents the market’s view on the annual pace of inflation over the next two years -- is currently 3.3%, while the 10-year rate is 2.7%. That suggests that traders expect price pressures to subside over time.
What we do not see, what most of us never suspect of existing, is the silent but irresistible power which comes to the rescue of those who fight on in the face of discouragement.
Almost everyone is screwed up, broken, clingy, scared, and yet designed for joy. Even (or especially) people who seem to have it more or less together are more like the rest of us than you would believe. I try not to compare my insides to their outsides, because this makes me much worse than I already am, and if I get to know them, they turn out to have plenty of irritability and shadow of their own. Besides, those few people who aren’t a mess are probably good for about twenty minutes of dinner conversation.
This is good news, that almost everyone is petty, narcissistic, secretly insecure, and in it for themselves, because a few of the funny ones may actually long to be friends with you and me. They can be real with us, the greatest relief. As we develop love, appreciation, and forgiveness for others over time, we may accidentally develop those things toward ourselves, too.
The main thing is the YOU beneath the clothes and skin—the ability to do, the will to conquer, the determination to understand and know this great, wonderful, curious world.
Don’t shrink from new experiences and custom. Take the cold bath bravely. Enter into the spirit of your big bedroom. Enjoy what is and not pine for what is not.
Read some good, heavy, serious books just for discipline: Take yourself in hand and master yourself. Make yourself do unpleasant things, so as to gain the upper hand of your soul.
In a seemingly invulnerable, one-sided market, the only chance bears have, is in finding a slight opening and exploiting it with full-blown aggression.
As it stands now, we know how early it truly is both in today's session and overall with where we are in the bull run to make any presumptions about a market top, let alone a standard correction even underway.
But we do know that bears actually scored some points this morning with their downside pressure on the IWM, ETF for the small cap Russell 2000 Index.
To be sure, without AAPL, FB, GOOGL, MSFT, TSLA and the rest of the gang at least dipping a bit, there really is no broad market correction of which to speak, only constant and grinding rotation like we saw during the summer.
"We interrupt this program with a special bulletin: America is now under martial law. All constitutional rights have been suspended. Stay in your homes. Do not attempt to contact loved ones, insurance agents, or attorneys. Shut up. Do not attempt to think or depression may occur. Stay in your homes. Curfew is at 7PM sharp after work. Anyone caught outside the gates of their subdivision sectors after curfew will be shot. Remain calm, do not panic. Your neighborhood watch officer will be by to collect urine samples in the morning. Anyone caught interfering with the collection of urine examples will be shot. Stay in your homes, remain calm. The number one enemy of progress is question. National security is more important than individual will. All port broadcasts will proceed as normal. No more than two people may gather anywhere without permission. Use only the drugs prescribed by your boss or supervisor. Shut up, be happy. Obey all orders without question. The comfort you've demanded is now mandatory. Be happy. At last everything is done for you."
Equities are enjoying a bounce led by some of the beaten-down parts of the market of late namely the Dow industrials, transports, small caps, energy, banks, and materials. Tech is showing relative weakness, as bonds run into resistance.
This is the standard "re-rotation," musical chairs-type of move we have grown accustomed to, although one I am increasingly skeptical of in terms of sustainability. Still, on a smoky summer Friday it may not be the exact moment for bears to try for a major intraday reversal. Indeed, looking out to next week could easily be the bigger battleground, as we find out whether the recent bounce in bonds was nothing more than a bear market rally, guiding a new regime of higher rates for the foreseeable future.
This could give insight into when the Federal Reserve is going to cut back on its monthly bond-buying program, which has been a major supporting factor in the economy and market growth throughout the pandemic. Though the Fed has been hesitant to end the program anytime soon, it has raised worries of how much debt the economy can handle before inflation gets too hot.
The market is weaker than the S&P 500 and Nasdaq are suggesting which has been evident in the inconsistency we have seen from stocks trying to emerge from basis. Some are working , but more are not.
With the market up and more capital (i.e. money) in the system than anybody knows what to do with, the investing environment is getting tougher.
After 12 years of the Fed pumping money into the stock market, it’s difficult to imagine or remember (depending on how old you are) a scenario where stocks don’t simply go up, or recover within weeks of a dip. Throw in some GameStop and Dogecoin and it seems like investing in stocks will always get us where we want to go.
But stocks are expensive by almost any measure, and bonds are not paying anything meaningful. Although expensive stocks can get more expensive, math tends to win over long periods of time.
A popular measure of the “expensiveness” of stocks is the Shiller P/E Ratio. There is little correlation between the Shiller P/E Ratio and 1- or 2-year returns, but there is a 90% correlation over 10 years. In other words, stock values can’t be used for timing, but they can be used to set long-term expectations.
I recently got ahold of a research report from BCA Research, which is a widely-respected research firm that has been around since 1964. Here are some highlights (warning: they aren’t rosy).
“Returns over the next decade will be very low compared to history. We project that a standard global portfolio (50% equities, 30% bonds, and 20% alternatives) will return only 2.9% a year in nominal terms. That compares to a historic return of 6.3%.”
“Some assets will produce better returns, most notably small caps (4.9%) and alternatives (6.2% for private equity, for example). But they also carry higher risk.”
“Returns over the coming decade are likely to be very disappointing compared to history.
A US-only portfolio…is likely to produce only a 2.8% return, compared to 7% in history.”
“The reason is simple: Valuations currently are stretched in almost every asset class. The risk-free rate in the US is 1.6% (compared to a 20-year average of 3.1%). It is negative in the euro area and zero in Japan.”
Here is a sample of forecasted returns from the report. The first number is the “Projected 10-15 Year Annualized Return” and the second number is the “Historic 20-Year Annualized Return”.
Investment Grade Bonds 2.0% / 5.7%
High-Yield Bonds 3.2% / 7.7%
Global Stocks 3.1% / 7.0%
U.S. Stocks 2.6% / 8.5%
U.S. Small Cap 4.9% / 9.9%
Emerging Markets 4.3% / 11.1%
U.S. Direct Real Estate 9.8% / 8.2%
U.S. REITs 7.7% / 9.7%
Private Equity 6.2% / 11.1%
Commodities -0.9% / -2.4%
Farmland 6.5% / 12.1%
Timberland 5.7% / 5.7%
Gold 3.8% / 10.0%
50/30/20 Portfolio (US) 2.8% / 7.0%
50/30/20 Portfolio (Global) 2.9% / 6.3%
We are finally seeing some legitimate concern and, at least, acknowledgment by markets that the FOMC tomorrow afternoon represents some type of risk in terms of the possibility The Fed may hint or outright focus on tapering/tightening. And with a hot PPI number this morning language on the Fed statement and/or presser tomorrow about fairly imminent tapping would be entirely justified.
Of course, we know with this iteration of The Fed that entirely reasonable actions are never a given. And there are quite a few seasoned investors out there fully expecting the Fed to stay ultra accommodative.
In the meantime, we have a market featuring mostly dipping and squishy action today.
The beginning of freedom is the realization that you are not "the thinker." The moment you start watching the thinker, a higher level of consciousness becomes activated. You then start to realize that there is a vast realm of intelligence beyond thought, that thought is only a tiny aspect of that intelligence. You also realize that all things that matter - beauty - love - creativity - joy - inner peace - arise from beyond the mind.
You begin to awaken.
While some names are acting well, there is still plenty of mixed action in growth stocks below the surface as we speak which is causing some headwinds for bulls. The issue is not so much the initial headwinds as it is staying objective as to whether we see actual, violent rejection from the 20 day average price area on QQQ, or instead, just some backing and filling without rollover. Keep an eye on Bitcoin today, as another weekend leg lower could set the stage for some fireworks in stocks next week.
"The best thing for being sad… is to learn something. That is the only thing that never fails. You may grow old and trembling in your anatomies, you may lie awake at night listening to the disorder of your veins, you may miss your only love, you may see the world about you devastated by evil lunatics, or know your honor trampled in the sewers of baser minds. There is only one thing for it then — to learn. Learn why the world wags and what wags it. That is the only thing which the mind can never exhaust, never alienate, never be tortured by, never fear or distrust, and never dream of regretting."
1. Take a step back from the "flickering ticks" of daily market activity and focus on the long-term trends.
