It's expected that the Fed will announce a new normal this week by winding down its stimulus program. The injection of funds into bonds has been reduced to a trickle and interest rates are about to get a boot in the backside. This, according to those in the know, especially in reference to Janet Yellen and her steadfast approach to 'following through on promises.'
As JJ Kinahan at TDAmeritrade says of Yellen: 'Her job is not to make the stock market go up. It's to keep the economy stable, and in her view the economy is strong enough.' I think these are positive words, and I agree with JJ's sentiment. As you have read from other blogs I've written, you know very well my thoughts on Yellen. Still, the fact that she seems to be sticking to this great gun is a sign that we might very well have a killer bee in the Fed chair after all.
Now, you add in the short term concerns over volatility (let alone that crazy spike to 31 in the VIX recently), and you have some fear and concern. Personally I am not too concerned, simply because the government backing out of its current babysitter position into something a lot more manageable HAD to happen. It's always better now than later. This lets us all adapt and learn how to live with this new normal. I believe this about everything: Tell me the truth today. Let me pay my taxes now. Why would I want to wait? Let's get it over with.
I'll let JJ speak one more time, as quoted here on Forbes. 'Although better-than-expected earnings seem to be offering support, the volatile market action in the first half of October is a reminder of how rapidly macro concerns can re-emerge and suddenly rattle global financial markets. Keep this in mind as we dig in for another week of rapid-fire earnings from Twitter (TWTR), LinkedIn (LNKD), Kellogg (K), Starbucks (SBUX), Buffalo Wild Wings (BWLD) and others, including several health care and energy companies.'
You said it, JJ.
Blessings to all.
Because I tend to be a bit lazy (well, not really, but kind of) on Friday, I think it's best I share the week's best curated financial news. This is, of course, in case you missed out reading this stuff in my blog, on Twitter, or (gasp) on CNN.
Enjoy and have a great weekend:
The Insane World of Wall Street?
What didn't banks learn from 2008?
What is a non transparent ETF and why does the SEC care?
Is your brain shrinking?
You have your priorities out of whack!
Why aren't you using your vacation days?
Want to be a Futures trading guru?
Best chart shot of the week!
Stuck with a big old stock?
Too much oil in reserves?
Facebook is a rock star.
Book your holiday travel asap!
Amazon struggling? Don't feel too bad now.
Jimmy John's makes employees take a bite.
With that, have a happy pre-Halloween weekend, and don't do anything to dangerous or silly.
As the US stock market shifts, shakes, shucks and jives, especially over these past 6 weeks, I've noticed an increasingly predictable pattern. The market is participating in what I call a Doppelganger swing:
Every deep sell off results in an equally large gain the following day, almost identical in dollar size. I've seen this a few times in the past 7 years, but hyper consistently over the last month. The SPX will be down 1.8% today and up 1.8% tomorrow. Why the fight? Why is the market so radically consistent in its inconsistencies?
“Make no mistake that what we’re experiencing now has literally nothing to do with global growth, earnings or valuations. Psychology is driving this market and it is truly fascinating to watch.”
- Michael Batnick
Agreeing as I am, psychology seems to be driving this market more than anything else. Granted, when you really look at it, psychology has always driven the market. Why else would the mere mention of Ebola strike fear, death, and dismemberment into the hearts and minds of the savvy investor? There is something about man's deepest fears that invades the place where ideas and commerce collide.
According to Mr. Batnick, nobody knows anything. Nothing. At least regarding the day to day trappings of the US marketplace. To me, that's part of the charm. That's where the freedom to discover can result in winning and losing and why we like to participate. It's controlled gambling, where we see the cards of the other players, and we buy or sell risk depending on who's flush we like more.
To quote: "Last week we experienced some extreme bearish sentiment as the S&P 500 had a peak to trough pull back of 9.8%.The “Fear & Greed” Index went to 0 and my friend Ryan Detrick told us that the NAAIM equity exposure was at the lowest levels since September 2011. The fear on the stream was palpable. Today, just one week later, we are 7% off the lows and just 3.5% away from making new all-time highs."
Insanity? News? Again.... Ebola?
Yesterday, Barry Ritholtz of The Big Picture, Bloomberg, and Ritholtz Wealth Management wrote a great blog on things that scares the market. Riffing on fears, he writes:
"We fear the awesome predatory perfection of the great white shark, and have made the Discovery Channel’s “Shark Week,” “the longest-running cable television programming event in history.” This seems somewhat disproportionate, given that 10 people a year die from shark attacks — out of more than 7 billion people. If you want to fear a living creature, than logic suggests it’s the mosquito — they kill more human beings than any other animal on the planet."
Again, the world runs on the psychological end game. So, how do we beat psychology at its own game? Personally, I'm not sure, but I can attest that anything you do, with enough time in service and use of current resources, you will become numb to what 'may' happen and you will focus on what will 'probably' happen. Shaping your day around potential occurrences is a lot smarter than allowing yourself to be disabled simply by fearing something that will (probably) never affect your life. Ever. We're talking 99.99999% type stuff here.
That would be the wisdom I can only hope Barry is speaking of.
Ebola. SARS. Killer Bees. Read the full article here.
With that, as always.....Blessings.
Being a drummer, especially a person that comes with the hyperactive programming of a drummer, I am often accused of taking risks, or moving too fast without waiting to see what the consequences of my speedy choices are. That said, much more often than not, my speed has allowed me to create great success, because if anything, I will fail fast. I'd rather fail fast than not try at all, because I'm worried about results I cannot calculate for. Does that make sense?
So, it came with some surprise that I read this quote today and instantly fell in love with it, because in so many ways, what she's saying is the antithesis of who and what I am, and how I live my day to day life.
Check it out:
"Speed in making up one's mind is not an important element in successful choices. In fact, the snap decision is often not a decision at all but a technique of avoidance. Thought it created an illusion of command, a lightning choice may mean only that someone has snatched at the handiest alternative rather than come to grips with the real issues involved."
- Dr. Joyce Brothers
Granted, she did say "may...." so, there's that. Anyways, the quandary continues.
When is it good to respond immediately? In love? In finance? In honor? In integrity? In defiance?
I'd love your thoughts and feedback on this today. Thanks and as always...........
A college philosophy professor asked just one question on his final exam. He picked up a chair, put it on his desk, and wrote on the blackboard, 'Using everything we have learned this semester, prove that this chair does not exist.'
Most students wrote feverishly for the entire hour, some of them churning out twenty pages of heady philosophical logic. But one student turned in her paper after less than a minute, and she was the only one to get an A. What did she write? Two simple words: 'What chair?'
Engaging people in a gentle, respectful, yet influential manner is an art. There are numerous ideological and emotional pitfalls to avoid with balanced decision-making skills and alert reasoning. But this young philosophy student has learned something that we too must learn: sometimes the wisest argument is no argument at all.
- Steve Arterburn
Here's this week's cool links and thoughts, lovingly curated from various trusted sources:
Sell in May? No way.
Have fun trying to refinance that home.
I guess I may still have a job.
Apple got complex, all of a sudden.
I admit it... this article about retail investors made me chuckle.
Whatever happened to the threat of inflation?
Optimization doesn't matter if your clients leave.
Managed Futures continue to be a strategy.
If you must have a robo advisor trade for you?
Gas for $2.50 a gallon? What is this, 2012?
Why is Mark Cuban buying Netflix stock?
Those hedge funds don't look so bad now, do they?
I'll end today's curation with a quote by Rick Ferri:
"If you feel the urge to exit the market during a volatile period, you would do well to remember that you picked your equity allocation willingly and likely during a period when you weren’t emotional. No one forced you to pick this spot on the risk-and-return curve. You did it in good conscience and for good reason. The trick is to recognize Kahneman’s observation that the fear of loss is more powerful than the joy of a gain, and that you’re experiencing that now."
Now, that's what I'm talking about.
"Flatter me, and I may not believe you. Criticize me, and I may not like you. Ignore me, and I may not forgive you. Encourage me, and I will not forget you."
- William A. Ward
Powerful words, indeed.
I'm certainly responsible for speaking unflattering words on occasion. I'm sure I've been the topic of unflattering words as well, even though I've been fortunate enough to rarely hear them spoken towards me, at least out loud. It's not because I haven't deserved them at times, because I know I have. Regardless, we are being charged to create greater successes in life simply by being positive and affecting the lives of others in profound ways.
I like to say it like this: It's better to affect the lives of others than it is to infect the lives of others.
With that, here are some additional thoughts that I read this morning, coming from the blog of Steve Arterburn:
"The Wisconsin State Journal once asked some of the nation's largest corporations to share their most unusual experiences interviewing prospective employees. Here are just a few examples:
Yes, these people have issues with communication. But it's not a stretch to say that many of us have the same kinds of shortcomings when it comes to communicating with our families, friends, coworkers, and even God. We need to ask God to help us communicate effectively and clearly. We need to work on expressing what's in our hearts in a way that blesses the people around us."
Couldn't agree more..... so, go have an impactful day.
“Panics are good because they force people to rethink. It’s a forced time to garden.”
- Howard Lindzon
"Consider that you are in a war to create evidence....evidence that you are winning, that the strategy is succeeding, and that you are building momentum. Fighting against you in this war will be fault finders who are recording every misfire and (furthermore) telling everyone who will listen. You need evidence to help you gain the genuine support of your colleagues."
- Christopher Zikakis
Isn't it interesting that there are constant factors at work to disable your successes, both professionally and personally? If you were aware of how you sabotage your successes (even if you don't believe you do), would you change? Would you really change? What are the keys to finding success in the din of life, against all odds?
If one only knew.....
Here's the thing, though. You do the same thing everyone else does. You do, and you don't know it. You are quick to assume the negative and long to embrace the positive. It's always interesting to me how this applies to 100% of people, myself included.
Why do we give so much power to the negative and rarely trust the positive? Regardless of where you stand on the subject of faith, it's obvious we all assume the worst case scenario when a questionable event, or a nebulous business opportunity occurs in our life.
“It was so risky and so scary, and yet at the same time, so beautiful. Maybe the truth was, it shouldn't be easy to be amazing. Then everything would be. It's the things you fight for and struggle with before earning that have the greatest worth. When something's difficult to come by, you'll do that much more to make sure it's even harder (if not impossible) to lose.”
- Sarah Dessen
Understanding what obstacles you put in your way (or what are naturally occurring) is a huge step to getting past them. Kevin Daum wrote an article for the online version of Inc. Magazine, back in April, and here are his thoughts regarding the BIG 3:
A. External Obstacles - These are obstacles outside of your control such as the economy, natural disasters, physical limitations, and the political climate.
B. Internal Obstacles - These obstacles are generally one-time issues but you have direct control over them, such as debt, cash flow, time availability, needed skills or talent.
C. Habitual Obstacles - These obstacles reflect how people get in their own way. They can only be removed with behavioral change.
....and the subsequent mastery entails the following:
1) Embrace Self Awareness - Adjust your behavior
2) Use Time to your advantage - With time comes momentum
3) Commit to focused discipline - Pick 1 thing and attack!
4) Engage your own creativity - Be creative to remove the grind
I don't want to steal the entire value of the article, so I do suggest you read it here, just in case this topic thrills you.
My point today is that we all struggle. We are all capable and yet find ourselves inadequately able. It's a conundrum, completely because we are all truly amazing beings. We are loved. We have influence, and most of all we have support. I think the thing we all miss is the belief that we aren't alone, fighting the wilderness.
We are not alone.
These are the personal (and sometimes business) musings of a former know-it-all.