How ‘Bout That Market: 2/27/2017 Crisis

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

The markets continue their march upwards in spite of unrelenting headline risk.  The stretch of positive performance is somewhat unnerving because of two streaks: an 11-day winning streak for the Dow and 48 days without a 1% move in the S&P 500.  This is really weird action, especially in the face of an emotion-driven news cycle.  Have we finally reached the point where reporting everything as a crisis means that nothing is a crisis?  Liz Ann Sonders remarked on a call that when there are so many voices calling for a bubble, it’s not a bubble.  I’m inclined to agree.  Even the perma-bears seem to be tiring of shouting bubble all day.

News seems to have devolved into second-guessing President Trump’s every move.  Real news is getting drowned out.  The simple-minded are occupied by the journalism of outrage.  If gossip about the loudest and most aggrieved party is not your thing, we are fortunate to live in a time where you can filter out the click-bait culture and seek out information that matters to you.

Links

I mentioned in an earlier post that the financial system is not over or under-regulated, but mis-regulated.  Here is a good article from Bloomberg about what I meant.  Large firms can shoulder a regulatory burden that can suffocate a smaller firm.

Warren Buffett’s letter to shareholders of Berkshire Hathaway is ALWAYS a must-read.

Here’s a list of ‘Dirty Dozen‘ tax scams to be on the watch for.

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.