What an interesting September this has been. Rewarding, too.

September, in the markets at least, is over for this year.  As I wrote earlier in the month, this past month tends to be the roughest one of the year.  But not this year.

Not only is it over, it will find a place in financial lore as one for the record books.  At least from the standpoint of the S&P 500, this month was the least volatile September in 66 years. No small accomplishment.  The change between the index’s closing high and closing low for the entire month was just 2.1%.  Back in the fall of 2008, you may remember, there were days upon days where a daily move of only 2.1% was a cause for hope.

September, typically being the worst performing month of the year, has averaged a decline of 0.5% for the month. However, during 2017’s September, the market actually rose amid all kinds of potentially disruptive news.  How much? About one-and three-quarters percent.  Why?  I think earnings were a major part, and a good, sound part, too

That allowed the market to stay above the fray of a series of potentially rally-threatening events. For starters, the richest company and stock in the world, Apple Inc., was down close to 7% in September, after rolling out three much-hyped iPhone models. Out came the phones and down went the company’s stock from which it has yet to recover.

Then take North Korea (please!).  A war of words escalated between the leaders of our two countries, which has raised the threat of  nuclear war.  Usually, that would be more than enough to tank stocks. Also consider the punt by the White House and Congress of the debt ceiling deadline until December, when they’ll have to start negotiating all over again. Then, too, there was yet another belly flop of an attempt to repeal Obamacare fell. That one fell flat on the floor of the U.S. Senate.

There’s still more that might well have upended stocks rise this past month. The Federal Reserve said it just may raise interest rates one more time this year, surprising a lot of folks who thought, given recent inflation weakness, that the FED would stand pat for the rest of this year. What usually bugs investors about such a future move didn’t this time: stocks often have trouble marching higher as the Fed ratchets up rates.  But then, you must realize that the FED is less “raising” interest rates than trying to return them to normal.

If anything, the market only grew calmer over the course of month. Last week, the S&P 500 traded in a range of just 0.5% — the smallest range its traded in since 1972. And it was only the ninth week this century that the trading range was smaller than 13 points.

If third quarter earnings continue like the last couple of quarters to come in strong, and global economic activity continues to accelerate, growth in our portfolios could continue. But the market has been so calm for so long that you have to be mindful that this can’t go on like this indefinitely.  Now, that’s no hint that I sense a collapse or a recession is around the corner.  It’s just the statement of a realist that “trees don’t grow to the sky,” and markets don’t rise forever.  At some point, yes, they will take a break. But I don’t see the conditions yet that would tell me, “batten down the hatches.”

Posted in economic recovery, fear, investment wisdom, market corrections, Market falls, market volatility, Personal Finance, retirement investing, saving, stock rallies, Successful living | Leave a comment

September is the roughest month of the investment year.

Yesterday marked the 8-1/2 year anniversary of the great bull market that is still going on. On March 9, 2009, the S&P 500 reached its closing low of 676.53. The previous Friday, March 6, 2009, the index touched its sinister-sounding intra-day low of 666.79. To give you an idea of how bleak things were, that morning the government reported that the unemployment rate touched a 25 year high, and the non-farm payrolls report for February, 2009, came in at a whoppingly awful minus 651,000.

Yikes!

But things are quite different today. Last Thursday’s close of the S&P 500 Total Return Index showed a gain of 332.64% so far in this long bull market. That’s enough to have turned any dollar invested into the S&P 500 Index, with dividends reinvested, into $4.32. Every dollar.  Quite a bit different from what would have happened if someone put money in a C.D. over the same period.

This has been one of the longest and strongest bull markets in history. Yet what’s really fascinating to some of us is how hated it’s been. And remains.  If not “hated,” then disbelieved. Some people just can’t stand to see the indexes rise higher and higher.

We’re all constantly told by pundit after pundit that it’s nothing but a reckless bubble that’s going to crash any day now. Or, some say it’s all due to the manipulations of the Fed; and when the Fed pulls back (which, by the way, the Fed began doing a couple of years ago), the market will come a-crashing down.

Give us a break, please.

Predicting that the world is about to end is one of the favorite pastimes on Wall Street and many conspiracy theorists.  Still, the bull market marches on. In fact, this year may turn out to be the least volatile year on record for the stock market.

If there’s a golden rule for long-term investing, the kind of investing I want for those of us saving and investing for retirement, it’s that betting on disaster is always overpriced, and betting on “it’ll all work itself out” is always a bargain.

September, remember, remains the toughest month of the year for stock market returns. On average, the market falls a full percent or a little more each time September rolls around. And true to form, in the last month, the S&P 500 is down about a half percent. Not great, of course, but it’s still up about 10%, year-to-date.  Again, much better than a CD.

August and September are the two roughest back-to-back months on the calendar. But beginning in November, we come into the best six month stretch of the year.

Don’t pay attention to the day-to-day gyrations.  Don’t listen to the many negative voices telling us that this is a bubble, the bull market is too old, it has to crash, and lots else like that. They don’t know.  Nor do I.  There is no recession in sight yet.  Just stick to your knitting.

Does anything concern me?  If I could honestly seeing a recession coming.  Or, a strike on, or from, No. Korea. Each of those would upend the order of our lives and investing.  But we can’t hide from things we can’t predict or control or influence.

Hang on.  And have some faith.

Posted in economic recovery, fear, investment myths, investment wisdom, market corrections, Market falls, market volatility, retirement investing, saving, stock rallies, Successful living | Leave a comment

We interrupt this program to bring you this bulletin

The market is now down two days in a row.  Imagine!  Are you getting weak-kneed?

I hope not.

Let me share a couple of charts with you to provide some perspective.

Image result

The August/September period of the stock market – the chart, above, is of the S&P’s performance from 1929 to 2012 – is the roughest period of the year.  The above chart notes that the average return for August is about +0.7% for the month of August. But isolating monthly returns for August during the last 50 years pull that average down towards September’s more dismal average. Suffice it today, for seasonal reasons that no one understands, August and September are tough months.

Add to this, the goings-on with No. Korea, and we could be in for quite a tizzy. Peace and diplomacy are uppermost in my mind, and probably yours.  But this is a can that’s been kicked down the road for multiple decades.  No. Korea acts up, threatens neighbors or the world, nations agree to talk, more threats are muttered, and time and bribes are offered to stop the hysterics.  That’s been the script.  At least so far. Perhaps, it is time to challenge that script.  Or, are we to continue to permit, or even enable, a nation to act like a terrorist or to facilitate others’ terrorism in various, sordid places around the world until they are ready to stop or to cause us to cower into surrender?  Same goes for Iran, as far as I’m concerned.

Now financial markets are wonderful places to make money over time, but they are dreadful places to find examples of courage.  That, you will need to find within.

If I might offer some encouragement, take a gander at this chart:

Chart of the Day
As I have noted many times, we don’t know why stocks go up or down.  Not exactly.  Skirt lengths, Super Bowl winners, seasonality have all been alleged contributors.  But we seem most sure that the earnings of companies contribute a good deal to the dynamic. So, if that’s the case, then the chart above should give us some courage, in spite of the many voices of fear and negativity, that our economy is doing well.
Our new President may not be doing everything I would have hoped.  His temperament and self-discipline for the tasks he has been elected to perform leave much to be desired.  But his efforts to deregulate our economy by the executive orders and the people he has put in his government have provided a degree of optimism to our land.  I say that in spite of the endless drumbeat to delegitimatize and “resist” his presidency from the media and his many opponents.
So, I hope and pray that our willingness to confront an unpredictable enemy and the general malaise that Aug. and Sept. brings to markets do not rattle your resolve or willingness to do what’s right for the long-term good of our nation or for your retirement portfolio.
God bless us all.
Posted in fear, investment myths, investment wisdom, market corrections, Market falls, market volatility, news biases, political considerations, retirement investing, saving, stock rallies, Successful living | 1 Comment

Now this is what real financial news would look like

Honestly, so much of life is the same thing over and over. It might even be described as boring.

But doing it well and doing it for others is honorable work.

Take a look at this article by a gentleman, Morgan Housel – a wise man – I have quoted before. It is an article, honestly written, about a typical day in business and finance or in much else in life.  It’s worth your (and my) time.

Blessings to you,

Jim O’D

+++++++++++

An Honest Business News Update

NEW YORK – The S&P 500 closed at a new high on Wednesday in what analysts hailed as the accumulated result of several hundred million people waking up every morning hoping to solve problems and improve their lives.

The index finished up 4 points. Goldman Sachs strategist Bill Blake said the move was the result of unidentified marginal buyers being a little bit more motivated than unidentified marginal sellers. “We’ve now had 241 years of people in daily competitive pursuits to do things a little better, and those benefits add up over time. Mix that with some good luck and where we happen to be in the business cycle, and here we are,” he said. “My job is to sound smart, but you can explain this stuff to a five year old,” he laughed.

Corporations earned $5.89 billion in after-tax profits. Financial advisors and middlemen took in $710 million in fees. The difference, Blake said, would accrue to investors over time.

Analysts warned of several metric tons of dopamine and cortisol careening through the global economy, which they said created a near certainty of poor financial decisions. At some point, Blake said, these bad decisions create social proof and feed on each other, leading to recessions. “When is the next recession?” he asked. “I don’t know. Whenever the second mortgage you took out to buy a boat to appease your insecurity convinces your brother in-law to do the same, and his boat gives the boat salesman enough misguided confidence to become a day trader, and then all three of you crack under a collective bout of geopolitical bad luck or something. But we’ll move on.”

About 9,000 new businesses formed on Wednesday. Another 8,200 dissolved. Analysts expect the trend to continue, calling it an “unmistakable example of basic capitalism.”

Fifty-five million American children went to school Wednesday morning, leveraging the compounded knowledge of all previous generations. Analysts expect this to lead to a new generation of doctors, engineers, and problem solvers more advanced than any other in history. “This just keeps happening over and over again,” one analyst said. “Progress for one group becomes a new baseline for the next, and it grows from there.”

Three dozen political pundits yelled at each other on TV in front of an audience of 75 million. Meanwhile, a couple hundred million people were reasonable and productive in front of an audience of zero.

Just over 1,700 patents were filed at the U.S. Patent and Trade Office, with a few expected to change the world over the coming decades. “Pretty damn cool” said Sarah Donald, a PTO spokeswoman. “I wish more people paid attention to this kind of stuff.”

Facebook stock fell $0.23 to close at $169.16. Four-hundred seventy one news outlets covered the move. No one knows why.

Analysts expect more of the same tomorrow, with the trend continuing into next week.

* Nothing, and yet everything, about this post is accurate.

Posted in economic recovery, fear, investment wisdom, Personal Finance, stock rallies, Successful living | 2 Comments

Thoughts on our not-so-new President and markets

It’s now a little more than six months since President Trump was sworn in. World markets show that of 76 countries, stock markets around the world have risen an average of 8% since Trump’s inauguration. Of all 76, all but 14 countries are up for the year.

But before anyone considers that as an endorsement of the new administration, may I say that it is not so. There is a global economic recovery taking place that started well before the November, 2016, U.S. election. And the new administration can claim little credit for that ongoing global recovery.

Look around. The President has accomplished nothing of his larger policy agenda, though much business-friendly, growth-oriented work has been accomplished by executive order. And market indices are at all-time highs.

The talk that this is all Trump, or that if his agenda wasn’t enacted, it would spell big trouble for the markets was simply…wrong.

Still, so many pundits simply can’t wrap their brains around this bull market. Their myopic view dismisses what is really happening and cites any of many issues that arise every week as a reason to sell everything you own.

None of this is meant to minimize the largely pro-business bias that the new administration endorses. But accomplishing any of this will take more time. If any of Trump’s major initiatives is enacted (with the possible exception of trade) even more positive tail winds for American growth, business, and job will follow.

So far this year, optimism in the business community has rekindled and corporate earnings have been nifty. Revenue generation and bottom line profits are growing. Margins are holding at healthy levels. An earnings-driven bull market is taking over from a Federal Reserve-engineered liquidity-driven market. The major banks and other financial businesses, always key to any bull market’s life blood, are performing.

Looking ahead, in spite of the ever-present reality of an possible pullback, I see more growth ahead. Investors fearful of pullbacks should keep in mind that positive results, so far, have being accomplished with none of the administration’s pro business agenda having been enacted as yet.

As I have pointed out before with charts and data, as of today, there is still little evidence that a recession is around the corner, nor much global credit market stress. A low interest rate environment with the Fed moving at a measured pace is raising interest rates slowly. On a more technical side, our U.S. indices and other global markets have broken out to the upside across the board, around the world. As least for now, it simply does not get much better, at least from an investing standpoint, than it is right now.

August is almost upon us. The economic calendar for next month seems clear of any major market moving events. It is at these times, of course, that is when we least expect it, that market weakness might strike. But I mean no prediction by that, just a statement of fact. Again, we’ll get pullbacks from time to time. They can come at any time. If you know of someone who has the date when the next one will begin, please let me know. But, in reality, when pullbacks will occur is unknowable, and they are an unavoidable part of the investing scene.  Moreover, they shouldn’t be feared, especially with the backdrop in place that we currently have. With the strength I currently see, any pullback is likely to remain contained. So I don’t see any bear market drop lurking. And any weakness on the next “scare” should be viewed as a buying opportunity.

I hope this gives my often worried readers a sense of the markets and investing ahead.  Nothing is a given.  N. Korea could act up even more than they are or ISIS could strike an American landmark.  But outside of these sorts of unpredictably events, even a chaotic White House and a Republican Congress that can’t pass legislation that it has dreamed of passing for seven years – if only they had a President willing to sign their bill – things look remarkably encouraging for the investors among us.

Posted in economic recovery, fear, investment myths, investment wisdom, market corrections, market volatility, Personal Finance, retirement investing, stock rallies, Successful living | 3 Comments