Panic is the big when things we’ve assumed, suddenly change.
Now uncertainty.
Interest rates are changing. Money is draining out of the system. The Feds are tightening.
We’re not too sure when or how much, or to what effect.
Covid is on again. Wasn’t Omicron meant to be less severe?
Uncertainty is panic.
Some people panic and do dumb things. Others panic and sell stocks — hopefully they will buy them back cheaper later.
It’s called volatility. Some people call it “rotation.”
It’s not clear what we’re rotating out of — the theory is out of tech stocks into stocks that make things, like Deere (the hit of the Consumer Electronics Show in Vegas).
The quant, stock trading computers do great. They get fed where the markets are going — it’s called order flow — and they guess where it’s going next — usually in the same direction. They do good, usually.
Some people are good at this. Some aren’t.
If all this sounds philosophical or evasive, you’re right. That’s what philosophy is all about.
Interest rates determine the value of assets, like real estate. When you can borrow cheaply, your major cost is less. Hence you’ll probably make more.
That doesn’t always work with stocks, though an amazing number of stupid people borrow money to buy stocks. I bet they’re covering like crazy as the market plunges.
Borrowing money (using leverage) they hope their guess is better than mine. It isn’t. We ‘re all in The Idiot Bucket together.
It’s been crazy recently. Look at Nasdaq for the 12 months from today. 2021 was a very up-and-down year, but we ended the year on top. Huge.
This year has started out miserably for the tech stocks I’ve been favoring. In general I’ve been holding everything I own — barring those that are now over 15% below where I bought them. For example, Snowflake and whose chart looks positively awful. But as I write this, I notice it’s already bounced a couple of bucks above what I sold it at. See how the Idiot Basket works.
The good stuff bounces. The market will bounce. It always does. I’m not touching my core holdings like Apple, Amazon, Nvidia, Google.
If you asked me for “buy” suggestions for today, I’d opt for Tesla, Ford, Deere, Apple. IBM, BRKB (which I missed), MSFT, ZTS, MRK and Airbnb. In fact, I bought some IBM this morning. What’s not to like: a 26 P/E and 4.87% dividend yield.
Look at BRBK (Berkshire) over the last year. Amazing:
I’m optimistic this year for stocks — and especially for the stocks we own (see updated list)
Over the weekend Joel Ross of The Ross Rant newsletter, wrote of this year’s outlook:
The ten year has begun to move up rapidly. It has moved from .90 one year ago to 1.77 today. Mortgage rates are now 3.22%. This suggests two things: the market knows rates are going higher for sure, and Omicron is not the feared new strain Delta or the initial Covid were. If inflation comes in even higher than consensus, and looks like it may go even higher for longer, then it is possible the ten year will hit 2.0% by late summer, and then move higher to 3% by 2023 if inflation remains at current or higher levels.
This is good for banks, and bad for most everyone else, especially for real estate. If the rate tops out at 2.0% or even 2.25% and then flattens for an extended period, then that will be helpful to stocks and real estate since 2.0-2.25% is not high by historic standards. If the rate gets to above 2.5% over the fall quarter, then that will be a real negative for the stock market. We will not know for several more months where this is going, but don’t be surprised if by October the ten year is approaching or at 2.0%. One thing is for sure, bonds are a bad investment now.
7.12% deal from the Feds
You can earn 7.12% from the Treasury’s Series I Savings Bonds
Sadly, you can only invest $10,000. But $712 in interest is far better than today’s miserable Nasdaq equity market.
For more information on the Fed’s little gem, click here.
You must have this in your car
Batteries die. Usually in the worst, coldest place.
This NOCO Boost Plus will start your car in seconds. It saved my life.
When your car is running again, you can plug this back in to your cigarette lighter and your car will charge it — just in case you need it a second time.
Truly brilliant. $99.95. Click here.
Useful tips
+ Smoke detectors should be in all your bedrooms. They’re cheap, easy to install and will save your life. What’s not to like? Weekend Bronx fire killed 19, including 9 children. They didn’t have smoke detectors.
+ Traveling? Go with a full tank of gas, blankets, food and water. If you get stuck, don’t leave your car.
+ Don’t leave your shoes on heated floors. The shoes get dried out.
+ It’s always the cable. especially the USB ones that charge your devices. They tear from constant use.
+ Always use synthetic oil in your car.
+ Lost your cellphone? Ask Alexa to call it. It’s my favorite trick. “Alexa, call my cell phone.”
+ FreeFileSync is the easiest way to back up your hard disk onto a flash drive, my safety valve in addition to the cloud.
My hurting shoulder
A bad backhand put my shoulder out ten days ago. Since then I’ve iced it, put IcyHot on it and rested it. It’s improving. Long-term, I need to do stretching and watch my posture. I’ve bought something called Primate Posture Strap Harness:
My wonderful trainer Jay Thorn of Old Chatham, NY said my awful posture (aka a slouch) was a material factor behind my aching shoulder. Buy yours here.
My shoulder is improving day-by-boring-day. When it hurts less, Jay say we’ll do some stretching (also called hanging).
I also bought this thing for icing my shoulder:
$21.50. Click here.
Stay away Chinese stocks
Chinese stocks. Any and all of them. I’ve been saying this for a while. It’s good to the right on something.
Saturday’s New York Times Business section lead with a devastating piece :
You can read the piece here.
This is a heart-warming story. It’s called Keep the Faith.
Everyone today should watch this video.
Favorite cartoons
Virtuous, but bored
It’s been ten days. I haven’t gone on the tennis court. It will make my shoulder worse. Been there, done that. Don’t do stupid.
I’ve given up salt, sugar and processed foods. I rode a stationary bike for 3 miles yesterday. Will do four today.
We’re stuck in our country house surrounded by icy roads and 11 degree temperatures.
I’ve been reading a lot, including this wonderful book:
There aren’t any magic bullets to Keepig Smart. No pills. Nothing. Don’t eat salt, sugar, processed foods, dietary supplements. Eat your vegetables, get 8 hours sleep a night and prepare for when you or a loved one will get dementia.
It’s the perfect book to read when the market is cratering. And I’m getting poorer by the day.
See you tomorrow — Harry Newton
