“The stockmarket needed this,” said my wise friend Todd this morning, who, meantime, has some nice bonds to sell.
See the irony?
A reader J. Browser, wrote yesterday:
.. Why would anybody want to invest in the stock market when the president of the U.S. is clearly insane? Nothing is off the table here. He could up tariffs to 50%, pull out of NATO and drop a “small bomb” on North Korea…
After investing in the market for almost 40 years I’ve moved mostly to treasuries, munis and cash.
There are “reasons” for the sell-off:
+ Outlook for the economy has dimmed. Corporate profits are dropping. Steel tariffs are killing the construction industry.
+ The Fed is raising interest rates. It still thinks the economy is booming. Old rule: “Don’t fight the Fed.”
+ Trade War with China drags on. Xi and Trump are both ultra-stubborn. Xi is helping his economy with infrastructure and help for the banks. You can do that when you’re President for Life. Hence less incentive to meet Trump’s demands. Xi has weapons. I quoted Nicholas Kristof on Xi’s weapons yesterday:
For its part, Washington misjudges as well. It sees China’s economy as vulnerable and doesn’t appreciate that China can wage a trade war with weapons other than tariffs. It can play a nationalism card so that it becomes unpatriotic for Chinese citizens to buy McDonald’s burgers, drink Coke or wear Nike shoes. Safety inspections can close American hotels; tax investigations can tie American firms in knots; and customs delays can hold up parts and idle American-owned factories.
Chinese tourism to the U.S. can slow, students can be directed to Australian universities over American ones and rare earth minerals needed by American companies may develop shortages. China can further ease sanctions on North Korea, buy more oil from Iran or become more aggressive in the South China Sea. It can cancel Chinese trademarks owned by Ivanka Trump – that might get the president’s attention – and it can dump U.S. Treasury bonds.
+ Housing is being hurt by higher interest costs. Houses are now more pricey. Don’t try to sell your house or apartment now. There are no buyers.
+ Investors in hedge funds are bailing. Hedge funds are selling to met their investor redemptions. Some hedge funds are simply selling to lock in gains. There are many of us who are still looking at gains in our equity portfolios — despite this sell-off.
+ Gridlock in Washington for the next two years, followed by an ultra-bruising Presidential battle.
+ Europe is not doing well. There’s Italy and Brexit.
+ Israel is going to war with Gaza, which just lobbed 300+ rockets into Israel. Not good.
+ People are holding Open Houses for places they want to sell. And no one is showing up.
+ Black Swan events — like the Malaysian corruption scandal that just hit Goldman Sachs, o the sudden drop-off in iPhone sales.
Today seems a good time to lighten up and hold more cash.
There’ll be great buying opportunities soon. But not yet.
That was a few days ago. Now comes word from a respected market observer, Lee Cooperman, who believes the stock market is reasonably valued/priced today – with the principal risks associated with Chinese trade policy and the big accumulation of debt (in both the private and public sectors). On a historical basis, given low inflation and low real interest rates, stocks are statistically cheap. On the other hand, he admits to a very weak technical underpinning to the markets and sees the shift from active to passive strategies as a contributor to the new regime of volatility, which is making many investors anxious and even fearful (because of the swift intraday markdowns seen recently).”
Says Raymond James’s Jeffrey Saut , this morning, who quotes Cooperman:
Yet, yesterday, the APEC Apocalypse roiled the Street of Dreams. Know that APEC stands for The Asia Pacific Economic Co-operation (APEC) summit in Papua New Guinea, where a war of words between Vice President Mike Pence and China’s President Xi Jinping destroyed the near-term trade agreement that lifted equity markets late last week. The intraday decline saw the S&P 500 (SPX/2690.70) index stop above last week’s intraday day lows (2670.75), which was above what we consider to be THE low of ~2603 made on October 29. This sense was reinforced yesterday with emails like this from one of our financial advisors, “It’s been deafeningly silent, but finally our most nervous clients are starting to call with concern. One, in particular, signals a bottom like clockwork. He just left a message. There is hope!”
We think the mid-November “energy peak” has passed and the panicky trading yesterday is only a retest of the lows and that this decline should be BOUGHT! I have been pointing to a downside mid-November “energy peak” for months, and it has come and passed! This morning, the preopening S&P 500 futures are near the recent 2670 low and are off about 18 points on lingering trade worries. Also plaguing the equity markets is that last night, the SCMP reported: Apple said to cut orders from two China component suppliers by 30% on lukewarm iPhone XR demand – The components are mostly used in Apple’s latest iPhone XR model, designed as a follow-up to the iPhone 8 and cheaper than the XS and XS Max models.
Best part of my investment strategy
Over the months, I’ve written about stocks whose basic business — and hence prospects — changed. I recommended dumping or avoiding them. I’ve been right. I’ve saved myself and my readers (I hope) huge amounts of money by avoiding (or selling) disaster stocks. They’ve included GE, Facebook, Boeing, Apple, Netflix, Nvidia, IBM and energy and commodity stocks.
What I didn’t do was to short any of these losers. That was a mistake… But my brain can’t handle being a bull and a bear at the same time. Moreover, I simply don’t get pleasure from staring at a screen all day. It’s not easy. Right now one of my biggest holdings is Berkshire Hathaway. Look at its performance this year. It’s positively stomach-churning:
Look closely. It’s still up on the year!
Blood in the streets
Baron Rothschild said
The time to buy is when there’s blood in the streets — even if the blood is your own.
We must be getting close to that time.
How can a bank be this dumb?
This is mind blowing. On Thursday November 8, I put a $100,000 wire instruction into my online bank system. The following afternoon (Friday), the bank calls and says they think my wiring instructions may be wrong. They’ve stopped my urgent wire. Their Fraud Department has nothing better to do. They claim someone hacked my incoming email and changed the numbers so my $100,000 would go to the hacker.
This, of course, is total nonsense.
To humor the bank, I call the wiree (the person meant to receive the wire) and have them read me the wire instruction numbers. The numbers were 100% accurate. I tell my bank. But it’s now too late to send the wire. They’ll do it the following Tuesday (the day after Veteran’s Day). I had promised the money on Friday, but the bank doesn’t care. (None of them do.)
Meantime, it’s yesterday. I check my bank account. My bank sent my $100,000 wire twice.
TWICE.
No apologies. No nothing. They initially claim it’s my fault. Then they think it might be their fault. Then they don’t know. They’re going to launch a full-scale investigation.
Meantime, I’m still out $100,000.
I call the company that received two of my wires… They say that “it looks like” they’ve got my extra $100,000… But they can’t tell because their bank’s accounts are messed up. Their bank is also launching an investigation.
It’s now Tuesday. I’ve been out of pocket $100,000 for a week. I sense I won’t get my money back today, either.
Does anyone know of a intelligent, competent bank? Or is that an oxymoron?
Saturday Night Live does Jeff Bezos.
This clip didn’t work yesterday via email. But it should today. If you haven’t watched it, please do. It’s funny.
If it still doesn’t work, click here.
Harry Newton.
Watch how the market ends today. It’s already bouncing up. Watch tomorrow. It may be time to start nibbling. We’ll figure where tonight and tomorrow morning. You have to be optimistic. Humans are wonderfully creative. Look what I just found on a pair of jeans. What a good idea!
