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Reasons for the volatility. What you should do about it.

Today we’re giving back some of our gains from yesterday. It’s a good exercise in charting.

Here’s today.

Looks awful. But now add in yesterday, for  a two -day chart. Not all that bad:

People asking “What’s with this volatility?”

Short-term, the stockmarket reacts to macro-emotions (my term).

We got plenty of them:

+ The pandemic. One day a cure. (Yesterday). The next day, an unfolding disaster. Today we read: “The number of people infected is anywhere from two to 13 times higher than reported in some regions of the U.S.”

+ Mayhem on the streets. Trump sends troops to quell it. Looks bad. The next day, people wake up to Trumpian politics:  He wants Portland to be BAD. Real BAD. Then he has an enemy only he can slay.

+ The awful economy. One day, talk is that unemployment benefits are running out. The next day Congress talks of another trillion aid. One day no one is paying their rent. The next day, we find out over 95% of commercial and residential rents for July have been paid. Retail is exception.

 The banks are fine. Joel Ross  of the Ross Rant newsletter writes:

It is clear now that the banks are in excellent capital condition and are able to carry on fully despite the shutdown and economic conditions. That is essential to the economic recovery and a short recession, unlike any other time in US history. Other than CMBS, the capital markets have mostly stabilized and capital flows are now normalized in most cases. Companies can sell bonds, IPO’s can happen, trading in stocks and most bonds is normalized to the degree it can be under these conditions.  The Fed achieved a very successful outcome. It is also clear that we will have ultra-low rates for the next two years, and possibly longer. Savings has risen substantially, incomes are up and according to JP Morgan, personal balance sheets are in good shape despite what is happening. Roughly half the people who have forbearance on mortgages and credit cards have made some payments. This is unprecedented in a recession. Good news.

Obviously, I’m not selling. I am buying selectively. See below.

People are stupid

A family flew up from Texas to Albany to an Airbnb they had rented in Western Mass. They had family friends who had a nice house on a nice Berkshire Mountain lake, replete with dock and boat. Texans called and said “We’re coming over.” The Berkshire mother answered, “No. You’re not.”

She tried to explain why — the danger of the virus, etc. The texans wouldn’t have a bar of it. They got angry. Really angry, calling into question their long-term family friendship, etc.

Do some people have a death wish? the mother wondered. Or are they just plain stupid?

Fortunately, Susan and I don’t have any friends who are stupid enough to want to stay with us.

I read Mary Trump’s book

Donald’s father, Fred, was ultra-successful and ultra-cruel. Donald played his father and his father’s mega-money to a tee. Sadly, Donald squandered the money in many horrible businesses — from casinos to airlines, from the Trump University to Trump steaks.

Mary Trump, the author, is a trained clinical psychologist. She does a pretty good of trying to understand what motivates Donald. It’s a frightening picture. But then everyone knew that, as you watch him ignore the pandemic, the nation’s agony with police killings, white supremacy, etc.

You can get a Kindle version of the book on Amazon for $15. But Google will find you cheaper places.

I actually read the book from cover to cover. It’s a good read.

The Big Trick for forwarding texts on your iPhone

Hold your finger over the text you want to forward. Within a second or two you’ll get the Copy command. Hit it.

Now you have the text in memory. Choose where you want it. In a text. In an email.

Hold your finger on the text box until Paste appears. Tap it.

Allocation. And timing

I should have less cash, more stocks. I don’t know what the right “allocation” should be. I tend to think it’s opportunistic. Grab stocks when prices ease back. In recent days, I’ve bought more NFLX, more JNJ, more MRNA, more SHOP and a little SRNE. Friends have found some interesting opportunities in commercial and residential real estate. There are “bargains” around.

I’m not buying gold, cannabis, bitcoin, airlines, hotels, cruise lines. But that’s me. I’m teaching myself not to feel like an idiot when a stock I reject suddenly skyrockets. Like Tesla, which I don’t own.

Don’t do ultra stupid

Highest risks of catching it:

Played my 129th tennis game this morning. See you tomorrow. — Harry Newton

 

3 Comments

  1. Dman says:

    Harry watching you and your lunatic family being forced to deal with actual reality is going to be the gift that keeps on giving.

    The Great Awakening
    Trust The Plan
    WWG1WGA
    Future Proves Past
    Enjoy The Show
    Q

    Harry, you are an epic fool.

  2. TomFromVa says:

    How about: 10 – Participating in a demonstration and attacking the police

  3. Tom says:

    How about a special section for mall cap tech stocks looking at at least doubling in the next 2-3 years.