If one lives with the market day in and day out long enough, it is inevitable that one will think they have heard it all. Of course, it is never true that one will “hear it all,” but certainly one can hear a lot of things that either make them think, chuckle, or just shake his or her head.
- WD-40 is on-demand stuff. If you’re machines are sitting idle you don’t need more lubricants. On the other hand if you’re getting new orders you’re going to have to go out and buy your WD-40 to make sure you’re machines operate.
The above is from an article that touts WD-40 has a bellwether stock for the reason stated. It is a staple for manufacturers worldwide, so when it is selling well, manufacturing is picking up. Frankly, this “thing I heard” made me do all three – think, chuckle, and shake my head.
China is in the news, again, and it is bad, again. Imports this, exports that, and it is all bad, well, bad relative to a 7% growth rate, anyway. In any case, I always go back to the basics when numbers jumble the brain and folks say the numbers mean doom. One basic that always pays off in terms of understanding the true nature of economic growth is the consumer. Is the consumer buying expensive products?
- Auto sales rose 9.3 percent over a year earlier to 1.4 million vehicles, the China Association of Auto Manufacturers reported Wednesday. That was in line with May’s 9 percent growth. June sales rose despite a shortage of credit in China’s financial markets and indications economic growth weakened.
So, even though the breathless media is telling us China is flagging economically, and we should be afraid, be really afraid, the Chinese consumer is not getting the message. As well, those Chinese consumers who buy moving vehicles other than cars, oh, say, businesses, are not listening either.
- Total sales, which include trucks and buses, also grew strongly, rising 11.2 percent to 1.7 million vehicles, according to the CAAM.
All I can say about the above is use the information to further your understanding that the global economy is a complex entity that has many moving parts. All pieces work in tandem, true, but the driving force behind all is commerce, people buying and selling goods. The degree to which that is happening is indicative of good health or bad health. Thus, the degree to which commerce is happening also points to market movement in the longer term. The “news” often drives short-term market movement. So, when playing this game, pay attention to both, but move your money on the verifiable data about commerce, because you never know what the news will be.
As long as I am dispensing “wisdom,” let me follow my words with the words of two folks who have been playing this game way longer than most of us in the game now.
- “People are too quick to accept conventional wisdom, because it sounds basically true… It’s a basic fact of life that many things ‘everybody knows’ turn out to be wrong.”
Jim Rogers
You see, I am not alone in my constant haranguing of conventional wisdom. As well, I am not alone in my consistent warning about paying too close attention to those who peddle market predictions on historical models.
- “Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the models. Beware of geeks bearing formulas. ”
Warren Buffet
Finally, if investing in the financials is your thing (it is one of my things), don’t be afraid of regulation. In the end, banks need to be controlled, and when they are, they are a much safer investment.
- The Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are effectively trying to force big banks to become more conservative or to shrink.
Don’t worry about the market movement today. The Fed and QE are still the siren song. Word is that investors are waiting to see the Fed minutes, waiting for a clue as to the future. Blah, blah, blah …
Trade in the day; Invest in your life …
