Little Occurred During the Trading Week - Weekly Blog # 949

  

 

Mike Lipper’s Monday Morning Musings

 

Little Occurred During the Trading Week

 

Editors: Frank Harrison 1997-2018, Hylton Phillips-Page 2018

 

          

 

Introspection During a Trendless Market

I have always been curious as to why so many bright investors don’t perform better overtime. These smart people often underperform the defined middle of the market as measured by major indices for extended periods! This appears to be true for both professional and individual investors over their investing lifetime.

 

One possible answer to this riddle is that market forces at every moment offer choices. Some of these choices contribute significantly to long-term results, while most choices don’t. Excluding luck, which is always an individual factor but not a continuous factor, I believe at most critical turning points the long-term correct decision is less believable to a large majority of investors.

 

Examining Our Current Choices

Don’t look at future choices in terms of which dictate buy or sell signals, which is what most do. Instead, consider the potential impact of making the wrong decision. Does this suggest that if you make the wrong choice, you will be materially worse off? A possible third choice is to temporarily increase your liquidity and wait anxiously for more information?

 

The following current choices are before us, to either engage or wait.

• Large-Cap Growth Funds – 2026 year-to-date +7.19 %, 5-year +10.25%, 10-year +16.18%.
• Small-Cap Growth Funds - 2026 year-to-date +18.80%, 5-year +4.09%, 10-year +11.85%.
• S&P 500 Yearly Growth Rate by I/B/E/S - 26Q1 29.2 %, 27Q1 14.3%, 28Q1 17.6%
• Erika McEntarffer, former BLS Commissioner Interview comments:
• Payroll data is a little hard to predict due to the change in labor supply.
• Businesses response rates are harder to reach as US business data is largely an all-volunteer endeavor, whereas in many countries it is mandatory.
• BLS staff has declined by 20% in real terms in the last 15 years.

 

Conclusions

1. Analysts and portfolio managers must look deeper than published pundit headlines.
2. The appropriate reaction to some less believable content may be to not only look deeper, but to also slowly commit reserves into developing investment strategies.
3. Diversification helps reduce the chance of large losses but also reduces the chance of large gains, which are often larger than the losses.

 

Question: what do you think?  

 

 

 

Did you miss my blog last week? Click here to read.

Mike Lipper's Blog: Searching for Future Long-Term Picks: Gathering Assets, Reasons to Search - Weekly Blog # 948

Mike Lipper's Blog: Too Many Short-Term Worries To Pick Long-Term Winners - Weekly Blog # 946

Mike Lipper's Blog: Is This the Last Hurrah? - Weekly Blog # 945

 

 

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