Honestly, some days “at the office” are boring. Today is one of those days. The market is going off in the opposite direction from yesterday’s over-reaction to the recent pullback, and that leaves me doing nothing because I don’t where this is all headed. Check that. I know where the market is headed longer term, but in the near-near term, I am lost. So, this means I read “news” about provincial election politics in Afghanistan until I get a grip on the market reality. I am not alone.
- If the current state of the market causes you to scratch your head a bit, rest assured that you are not alone.
See? I am not alone. David Moenning feels the way I do and he sums up nicely the reason I and so many others have a little break from the business of trading.
- Six days ago, the S&P 500 finished at an all-time high. Five days ago, both the S&P and the DJIA moved to all-time highs after the opening bell rang. Then for the next two and one-half days, stocks plunged due to the air coming out of the mo-mo balloons. And then for the past two days, the S&P 500 has rallied back – and is now just a smidge away from its high-water mark.
To be clear, I am not worried about the market. Over the last five years or so, the market has behaved this way more times than I can quickly count. My issue is that when it does this, I have to wait for it to settle down. Sure, I can do more research, and I probably will, but the truth is I don’t want to, at least not at the moment. I’d rather go outside and work, physically work on my teen’s playhouse or in my evolving garden, but …
Today’s exceptional weekly jobs report is not moving the market to the upside.
- The number of Americans filing new claims for unemployment benefits fell sharply last week to the lowest level in almost seven years.
These numbers tend to fluctuate, but the overall trend has been down for some time, so where are the long-term investors. Oh, yeh, they are sitting around with their buys in place in case the market keeps on going down. They don’t have much to do either, I guess.
Speaking of long term … I came across an interesting article this morning about who is invested in the market, specifically the stock market, The kids are mostly cash (and mostly wrong).
- Specifically millennials, aged 21 to 36, hold more than half of their assets across all accounts in cash, more than double the allocation of their elders, according to a survey by UBS released this year. Just 28 percent of their assets are in stocks, as against 46 percent for other adults (including retirees who often cut stock holdings for safety).
The article suggested that millenials are not invested in the market because they 1) still have fear from the 2009-2009 financial collapse, 2) believe that the market is rigged to the point where they believe they will get scammed, and 3) poor job security.
The article discusses many reasons why this investment strategy is not a good one, including a comparison of holding long-term cash versus a long-term market return. The comparison ain’t pretty.
- Being 52 percent cash at a young age is like mailing yourself a very, very slow letter bomb.
Yes, not being invested in something other than cash is crazy, especially if one wants to send kids off to college, retire with a decent income, or, simply, take long vacations to exotic places.
- It is almost impossible, though, to set up a scenario in which cash outperforms over the very long haul. It may for periods, even extended ones, but ultimately the value of cash – its optionality – is only realized when you use it by putting it to work elsewhere.
You see what I mean about being bored and not wanting to go to work? The subject of the article is interesting and it speaks the possibilities if the US economy picks up dramatically, but in the present, it does little to alter my trading reality. The conclusion, however, does give me a little spark of motivation because it reminds me that “this too shall pass.” The market will find a bottom sooner rather than later.
- The great irony is that there has never been a better time to be a small, independent investor.
Gotta go work outside until the market storm passes. As of this moment, the $DIJ is down triple digits and the SPX is flirting with the 1848 level, again …
Trade in the day; Invest in your life …
