How ‘Bout That Market: 2/13/2017

MarketDon't let the negative headlines about the stock market distract you from the fact that the Warriors blew a 3-1 lead in the NBA Finals with the unanimous MVP.

How ‘Bout That Market?  This is a question I hear at social gatherings often enough that it makes sense to make it a regular entry on this website.

The Market

How is the market doing?  Before we get to the market today, let’s look at how the market was doing a year ago.  On February 11th, 2016, the market was off to its worst start ever, down over 10%.  This was it.  This was the other shoe to drop.  Except that it wasn’t.  2016 ended up 12% in spite of significant headline risk (Brexit, Trump, Cleveland sports successes, etc).

How is the market doing today?  Twelve months after the market bottom, the S&P 500 is up over 27%.  The market continues to climb the wall of worry.  I don’t know when the march upward will end.  The only thing I would take as a sure sign of a market top is if we run out of negative news stories.  The time for caution is when the media stops hyperventilating.

The First 100 Days

What grade would I give President Trump’s first 100 days in office?  He’s been in office for less than four weeks.  Only an imbecile could make a judgement with confidence at this point.   Come on.

Do You Think It’ll Keep Going Up?

I think the stock market will be higher ten years from now, yes.  I do not know what path it will take to get there, but I know it will not be straight up.

The Disclaimer

Nobody knows nothin’.  The above is speculative bullshit.  If I had an inkling of what the market was about to do, I’d be on a beach in Antigua counting my money.  The same goes for your ‘stock guy’ and that dope on TV with the ponytail.  They don’t know what the market will do in the next week, month, year, or even the next 10 minutes.  They don’t even know why the market did what it did yesterday, last month, or last year, but that does not stop them from backfilling a narrative to explain an irrational, open system (as opposed to a textbook world of rational actors where all else is equal).  We humans seek these explanations out to find patterns in an effort to guide our future actions and justify past mistakes.

So why read this at all?  In my experience, 60% of people who raise the topic of investing in a social setting are seeking your approval.  30% are trying to establish themselves as an investing authority so they can sell you something.  The other 10% are genuinely interested in this stuff.  Ideally, this post helps you keep up your end of the conversation.  More importantly, I hope it helps you spot why the discussion turned to investing in the first place.

Photo by jmd41280