by Michael Antonelli, Managing Director, Baird
Equities start the day higher as Mr Toadâs wild ride settles down a bit. We got Madhouse Monday, Turnaround Tuesday, Wild Wednesday, so right now Iâm praying for a Thoughtful Thursday. Why is the market all of a sudden winging around like itâs head got chopped off? Well, to be honest, thatâs just how all of this works. Slow periods of gains are interrupted with violent periods of selling. The market doesnât move like a sine wave, it moves like that mark on Harry Potterâs forehead (h/t Cullen Roche).
What are we so worried about right now? Global Growth. How is it expressing that worry? By focusing on the Bond market, particularly the 10yr yield (I hope you can see TWTR from your desk, I got a lot of quality TWTR links tonight). This kind of singular attention happens every now and then but it doesnât persist. Remember when we cared about Greek Debt? Ebola? Crude Oil? Yea, all of things were at one point a major concern for stock investors only to be forgotten about a short time. Is this selloff over?
No one knows, so letâs do a quick check of sentiment. AAII Bears DOUBLED, which is an eye opener, but if we use the broader based NDR Crowd Sentiment poll (my favorite) we see that sentiment didnât really wash out like it did last May-June so I guess thereâs not much to go on there. Could we head lower again? Sure. Could we head higher? Sure. See why market timing is so hard (and dumb)??
After the open we got a rip roaring rally that took us above where we closed on Friday. You hear that? Wiped out the entire selloff that we saw earlier in the week. Now I was debating posting a chart that shows some of the best days in the market follow the worst days but my readers already know that because theyâre super smart. I love you guys.
Did I mention that your behavior as an investor is 10000x more important than âmacro forecastsâ or worrying about what the market is doing on a day to day basis? No? Well I just did. Speaking of behavior, NAAIM measures active investor exposure to the stock market and, get this, it had its single biggest weekly drop since 2013. I hope this puts to bed the notion that the stock market has âdeep seated bullishnessâ.
A 6% selloff from the highs and people ran out of the room like Costanza at that birthday party. Winners were AMD, SYMC, ADSK, and a whole host of other tech names. Losers were FOX, UA, PRGO, and KHC. Poor KHC, I guess KRANCH and MAYOMUST never really took hold? Iâm shocked. Whatâs that? They see Soy Sauce in China as a growth opportunity? WaitâŚ
We closed at 2,938, up 1.89%, and at this point new all-time highs are back in our sight. So does this mean the âall clear bellâ has been rung? Nope, Iâm not here to tell you that. We might make news highs, we might fall back to the lows, and we might go sideways. This blog exists to remind you that the market can and will do all sorts of crazy things (and that itâs ok to laugh about it every now and then).
What truly matters is how you ACT when the market freaks out because that will largely determine your success as an investor. You know who helps people like you avoid costly overreactions to random market panics? Advisors, we got a bunch of really amazing ones here at Baird. They sit a few floors down from me and think about the markets and investing the right way. Now if theyâd only buy me lunch from time to time Iâd sing their praises more.
CHICK FIL A PLEASE.
Final Score:Â Dow +1.43%, S&P500 +1.89%, Nasdaq +2.24%, Rus2k +2.10%
News Highlights:
- Are negative interest rates abnormal? My friend Joe delves into it. Definitely give this a read
- Speaking of negative interest rates, Ben tells us what to focus on in this new weird world: âDividends donât fall nearly as much as stocks when the market gets crushed. This is another way of saying prices can go far beyond the fundamentals. Taking out the Great Depression, there has only been a single instance where dividends fell double-digits (2007-2009). And that drawdown of 24% pales in comparison to the 56% or so shellacking in pricesâ.
- This was the most talked about article today on Wall St. The state of Asset Mgmt
- So these guys polled investors and asked them âwhat will be the best investment for the next 10 years?â The answer will shock you
- Ever seen a Backflip at the end of a cliff ?
- Football season is coming up people! You know your boy BullandBaird has the best food GIFs
- Why most people will NEVER be good at investing. Quick simple chart of all the foibles facing a normal investor. (psssstt advisors help overcome all of these.)
Weâll end tonight with my old pal Fail. How I missed thee (the pumpkin at 3mins is so funny)
Have a good night
