Do you consider yourself a “good” or “bad” investor? For example, one might say a good investor is someone who beats the returns of the Index over a long period (10.5% annualized). Beating the Index over the long-run is difficult to do… very few fund managers are able to do it. But what if I framed the question this way: (i) bad investors think of ways to make money; vs (ii) good investors think of ways not to lose money. Which one best summarizes your approach to speculation? Of the several thousand posts I’ve written the past 13+ years – this is arguably the most important question you could ask. If you understand the gravity of this distinction… you have a good chance of succeeding.
"S&P500"
Divergent Signals
The market is wildly enthusiastic about all things “AI”. If you’re a company – and you don’t have an AI narrative – the market doesn’t want to know you. However, I also think this is potentially a blind spot. AI will undoubtedly be important and will change the way we do things (as we effectively re-wire tech) – but it’s a tool. For example, whilst Wall Street celebrates that an iPhone might be able to better answer our questions – Main Street sees things very differently. Do you think the majority of consumers understand the optimism on Wall Street? And similarly, do you think Wall Street understands why consumers are complaining?
Is the Market “Euphoric”?
It’s that time of year… where “Sell in May and Go Away” makes its typically annual appearance. Personally I don’t give it much weight… basically none. Who invests with the timeframe a few months? Not many that consistently make money. But therein lies the rub – this saying is only relevant as a function of how you choose to invest. Your time horizons are likely very different to mine. This post will offer background where the adage comes from. From there, I will try and answer the question of whether the market is “euphoric”. And finally, I’ll share some names that I’ve been adding to…. it’s not NVDA.
“Heads I Win and Tails You Lose”
After almost three decades at this game – something you learn is not to fight the tape. Trade against momentum at your own peril. Consider the news today… it was both bad and good. I will start with the (perceived) ‘good’. The Consumer Price Index (CPI) was slightly cooler than expected. And whilst it’s still a long way above the Fed’s target of 2.0% – the market was thrilled it was only up 0.3% MoM and 3.4% YoY. Bond yields plunged and stocks ripped. Sure… 3.4% isn’t great… but that’s Main Street’s problem… Wall Street doesn’t care. However, the bad news was retail sales plunged. But wait a minute – that’s also “good news” – as it could mean a more accommodative Fed. Heads I win and tails you lose.
For a full list of posts from 2017…