Mike Lipper’s Monday Morning Musings
Too Many Short-Term Worries
To Pick Long-Term Winners
Editors: Frank Harrison 1997-2018, Hylton Phillips-Page 2018
Current Concerns
Both the management of our international and domestic
actions increasingly seem to be personality driven, and for the moment have at
best a one-year focus. The level of smart intelligence applied is from a
smaller and smaller number of people. The level of wisdom applied to Iran,
Israel, and the greater middle east does not appear to be working. Observers
believe it will take a considerable time to totally clear the Straits, while
pictures of shopping areas in Iran show them to be well stocked.
On the domestic side, there does not appear to be recognition
that large portions of the workforce are not working, at least regularly for
taxable pay. Part of the problem is people in government believing in test
scores and mandated promotions. Homes are stressed and less and less people
have the education desired by companies and governments to find qualified
people.
The new Chair of the Federal Reserve appears to recognize
these problems and finds government-generated statistics to be moderately
helpful at best. He believes the private economy can supply better numbers. One
of the time series I look at each Saturday morning is the list of weekly prices
in The Wall Street Journal (WSJ), covering 72 commodities, currencies, ETFs, and securities prices. For many weeks the two
largest weekly changes at the top and bottom of the list may have been
deceptive. In the current week the two top performers were the KOPSI (South
Korean stock prices) +11.43% and the Nikkei (Japanese stock prices) +7.92%. The
two biggest decliners were NYMEX Crude -9.75% and NYMEX Crude (US listed) -8.14%.
The third numbers in array were +3.64% and -6.57%. Thus, four out of
seventy-two were extreme and perhaps only of use to specific traders.
Turning to the securities markets which have also been
shifting in terms of importance. When our Grandparents followed the market, they
looked at the Dow Jones Industrial Average (DJIA), which was carried in most
newspapers and on most radio stations. As financial intuitions became larger,
they were followed too, as well as the brokers servicing them. Additionally, larger
individuals that somewhat competed with them followed the Standard & Poor’s
500 (S&P 500), which was on most wire (electric) services.
I am suggesting that the growth of relatively new Technology
companies, particularly those involved with “AI” captured in the NASDAQ
Composite, is more of a speculative market as many of these companies have only
been publicly traded for a few years. One way to see the difference between
those stocks tracked by the S&P 500 and the NASDAQ is to look at the
percent of new lows vs the percent of new highs. For this week new lows on the NASDAQ
were 65% of new highs vs. 47% on the SWX. Another way to look at this picture is
to use the percentage of stocks on the new low list, which was 46% for the NASDAQ
and 53% for the NYSE. This would indicate that older and larger companies on the “Big Board” are portraying
more problems on the NASDAQ. I suspect that a relatively higher portion of “AI”
related companies trade on the NASDAQ. If this is true, it should help their
outlook.
This weekend’s development changes everything. You don’t
have to accept my views, but you should understand them and I will be happy to
communicate with you.
Many of us are impacted by what our family passes on to us, long before we realize how the world really works. Fred Trump, a real estate operator sitting in Queens, New York passed on to his two sons the fears generated by President Hoover’s economic recession. The recession created encampments of unemployed workers, which were then labeled after the President. The current President grew up hearing these deep concerns without a fully understanding the 1929 Wall Street crash. The crash bottomed before the next President, FDR and his “Harvard Brain Trust”, took over in 1933. They turned the Hoover recession, caused by lose-money and the Smoot Hawley tariff, into a depression. FDR was the third of four structuralist presidents, after Andrew Jackson and FDR’s distant cousin Teddy Roosevelt. It was his various actions that took a serious recession into a much deeper and longer depression and was one of the causes of the rise in military governance in Italy. Germany and Japan were the alliance that created WW II. But the current restructures’ President Trump, who by personality and political skills, not policies, is much closer to FDR than he recognizes, panicked this weekend. He very likely saw a depression coming and looked at his battle with Iran as a costly distraction. He is now anxious to end his war with Iran to prevent the 1930s type depression he fears.
Longer-Term View
At times I feel that I am the only one focused on investing
for my grandchildren and now great grandchildren. With them in mind I look at
past “bull markets”, which indicate that it is rare for leading investments may
repeat in the next “bull market” and increasingly that is where I choose to
devote my time.
Any suggestions are most desired, as few people seem to think
that way.
Did you miss my blog last week? Click here to read.
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