Some Fresh Insights — and Some Questions
Investment managers are never really away from the job, but it was good to have some time off from writing. I usually enjoy writing, but it does require extra effort at the end of the day. When on vacation I am always in touch with developments, key issues, our trades, and our model recommendations, but I leave more of the administration and communication to my excellent team.
Last week they posted several articles that highlighted content from past work — topics that I recommended as highly relevant to the current market situation. If you missed them, I urge you to take a look — and also to follow the links. I often feel that I am trying to explain the same old point in a different way. These articles took some of my best work from the past.
The key dynamic continues to be the extremely strong growth in corporate earnings versus rather mediocre economic data. The bearish take on this has been to focus on the "economic headwinds" and the political climate. This has worked. In my travels I talk with individual investors — mostly affluent and Republican. These people are uniformly bearish for political reasons.
It is difficult to explain that people should be politically agnostic. I want to make money on my investments no matter who is in power. Don't you?
The misplaced emphasis on politics will be very expensive for most investors. If you read the article last week, you would already be showing a profit.
Meanwhile, some pundits continue to dismiss the strong record of corporate earnings growth, achieved even with a modest economy. What do they think will happen if things really improve?
A Few Questions
When I left on my trip, there were various predictions about the imminent demise of stock prices. It would be interesting to see if anyone has a revised opinion based upon the change in the data. Since I have only had time to read about facts, not opinions, perhaps my readers can help out.
Has anyone changed opinions with the changing evidence on the following:
- The Dow Theory Sell Signal
- The 200-day moving average crossover in the S&P
- The Death Cross (probably not reversed yet?)
- Dr. Copper
- Earnings misses due to excessive optimism
- Euro/Dollar parity leading to collapse of European Union and all stocks
- Elliott wave pattern — presumably has been adjusted?
At least some of the doomsayers from only two weeks ago seem to be on the wrong side. Have any remained true to their indicators and changed their viewpoint, or have they found new sources of skepticism?
I am interested in two different camps:
- Those who had bearish takes on one or more of the indicators and changed opinions with the change in the data;
- Those who ignored improved data or moved on to new indicators.
As regular readers know, part of my book project involves analyzing online sources. I would appreciate any comments on this subject.
We are certainly not in the clear with respect to economic growth. I have continuing concern about housing and jobs. I'll do my regular employment update this week. Where I differ from most is that I regard the worrisome news as mostly "in the market."
The average investor continues to believe that he gains insight from reading yesterday's news.