Well the year has not yet really started and we have a new array of things to fret over.
How many times will the Fed hike? Will they hike at all? Will they hike too many times?
Will they cause a recession? Will cheap oil kill us all? (Forgive me but my mind has difficulty wrapping my head around the whole issue of fearing cheap oil – it really is nonsense.)
Add this to the new stuff just in the headlines this morning:
“North Korea Tests Bomb – World Condemns”
“China’s Rout in One Chart”
“You Can’t Get a Bottom Near The Top”
“It’s 2008 All Over Again”
“Big Bull Cashes Out”
Good Lord, I could go on and on but this makes me ill knowing that too many listen to too much of this garbage in the press.
I have always said that in the short-run a market index looks more like a national EEG. It tracks the waves of our collective brain reacting to immediate and emotional stimuli riddled through every financial website or headline.
Sure…HFT makes it even easier – and worse for the short-term view and those who choose to put a reason on every decimal or event.
What is Missed?
Just please recognize that a short 40 days ago we were being told the Holiday Season was a mess – sure to be chalked up as a loser, destined for the dust heap of fears.
We were told winter was gone and not coming back.
In fact – that was wrong.
MasterCard tells us that the holiday shopping season was up nearly 8% year over year! The headlines left out that this was indeed one of the best Holiday Season YOY increases in decades – and still – a new record high.
You see, cheap oil is good.
And remember, the consumer drives the bulk of the economy (not oil rigs).
Other items missed today:
ADP tells us that hiring by private companies saw a surge in December. That should continue to help consumer spending and government revenue – and confidence.
Dr. Ed notes for us that the global demand for oil also rose for 2015 – by about 2.4%. That data, since 1995, has had a very strong correlation to the growth in the GDP for the following 12 months. Oddly, that would be good too…but no press.
I read a piece on housing in Portland as the Northwest explodes in demand as tech jobs surge. The weather might stink but the data show Portland is now down to a 2-month supply of homes available. They tell us a 6-month supply is considered balanced.
They say the southeast and the northwest are exploding in demand.
You do remember when we were told real estate was the death of us all and that the supply would never be used up? Realtors are now noted as saying, “You are lucky if you are one of the first 15 contracts when someone decides to sell.”
They say millennials seem to be driving the push. Something even crazier?
Gen Y will drive household formation demand for years to come – at a pace that will very likely leave us millions and millions of homes behind in the next 5 to 7 years. It will not be a straight line upward – but the increases will become more obvious.
Are We Permanently Scarred?
Sometimes I admit to wondering aloud while I conjer up ideas for your morning notes. : )
I find myself wondering this often these days:
Were we permanently scarred by the events of 2008/09?
Were we scarred by the collective roller-coaster ride during the span between 9/11, two bear markets, a global collapse, Wall Street mischief, a lost decade, terrorism, two wars, global unrest, oil shock up to $148, oil shock down to $30 and numerous government regulations thrown in to boot, including the onset of a now huge economic upheaval like Obamacare? (Geez, I am out of breath just typing all that crap)
My only answer continues to be “yes”.
How else could we somehow overlook all of the good? How could we possibly miss all the improvements in our lives, the new technical achievements, the medical break-through and the massive records set almost everywhere on the financial front?
I realize it is repetitive – but how do we miss record cash levels, record money market account balances, record personal earnings, record bank account balances and massive hoards of cash on balance sheets?
Even an energy sector collapse does not do anything except cause the overall GROWTH rate in collective annual earnings to slow/stall/dip slightly?
These are all marvelous events….yet we are always mired in fears. Our collective itchy finger is so ready to hit the sell button. Even more so it seems as time moves forward.
All the while, the data show that to meet long-term financial goals, one is far better off having a long-term investing plan with a long-term view. Efforts to trade in and out leave one open for many more bad things: missing the good days, missing the advantages born by fear in the crowd, hitting long-term financial goals and the list goes on.
I know, I know…all of that is boring.
It is much more exciting to feel the surge of fear rack our brains as we fret over the monsters on stage today.
It is more exciting to fear N. Korea. It is more exciting to fear interest rate hikes. It is more exciting to fret over companies missing by a nickel or whether $2.00 gas is worse than $4.00 gas.
As I round out this morning’s note, my wondering aloud has clued me into one more thing: Maybe this is why people think I am boring : )
Last thoughts…for today
Dips are good for long-term investors. Long-term investing can be painful at times – which is why so few succeed at it (and why it is a life-long process). It is easy to get caught up in the “now” of media hype….don’t do it.
Tough is what instills the long-term profit in building wealth. Going through “tough” is what an investor is paid for…
Now, slide me some more TUMS – I am going to go buy some lottery tickets.
More later…including our first video review of 2016.
Stay Tuned, be well – and patient.