Mike
Lipper’s Monday Morning Musings
Need
For a Correction Decline
Editors: Frank Harrison 1997-2018, Hylton
Phillips-Page 2018
Need
For a Correction Decline
Long-Term investing
includes long-term up or down trends, some periods of stable prices or stagflation,
and peaks/valleys. We will travel through each. There are both market and economic
cycles. The steepest is when market and economic cycles roughly coincide, or when
the market cycle slightly precedes the economic cycle.
All important cycles are due to imbalances exploited by traders taking advantage
of the rest of the market. As we have not had a corrective cycle for many years,
I believe we are due.
There are many recognized
imbalances, but I am focusing on one generalized area called demographics. Demographics
involve people in terms of numbers, earnings, births, deaths, recognized skills,
education and perhaps recognized political leanings.
In our last blog we dealt
with national productivity at the individual level. We already pay attention to
total national productivity. Most developed countries are experiencing declining
numbers of workers due to age. This has been a major concern throughout history
in terms of the ability to put large numbers of citizens in uniform. Increasingly,
a high percentage of the population (77%) are not deemed suitable for military
service in the US, although the US Marines have been able to meet their enlistment
requirement. Due to physical condition, education, criminal record, or attitude,
the majority are not suitable to protect their homes or allies. (As you read
this blog, ask yourself how many young people you know would volunteer to join if
we suffered a September 11th, 2001 type attack. I suggest one of many
reasons for their attitudes are expressed in their schools and homes. American
citizens and our allies should be worried.)
Other concerns
Lack of useful leadership
throughout society has resulted in people seeking corporate and government solutions
for major problems. This has led to a collection of politically skilled CEOs who
are not good operational leaders. Very few of these leaders are prepared to commit
to the kind of periods we enjoy with private companies and institutions.
One example occurred this
weekend when I unexpectedly spent a few days at a good local hospital receiving
treatment. A single medical officer commented that hospitals had become
understaffed when COVID reduced their critical support staff.
This past week saw poor results
in the financial industry. Three measures, including the NYSE and NASDAQ, saw
over 70% of their listed securities decline in the weekly WSJ price results for
markets, commodities and currencies. There will eventually be positive
operational results, but probably not until major senior managements are changed.
Please share your views
and correct me where I am wrong.
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week? Click here to read.
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