Mike Lipper’s Monday Morning Musings
Long-Term Money Via Telescope,
Not
Microscope
Editors: Frank
Harrison 1997-2018, Hylton Phillips-Page 2018
Historical Perspective
One lesson from studying history, including geology, is
guessing the very next move in a series, which is more likely to be random than
consecutive. The news business is an exception, selling a detailed description of
what just happened. For example, the weekend chronicles might point out that more
stock prices went down than up for the latest week and did so with higher
volume. They’ll mention that only 58% of the NYSE stocks declined for the week,
including 38% on Friday, compared to the NASDAQ where 64% fell for the week and
55% fell on Friday. Not one of these pundits mention that in the earlier part
of this year and most of last year a greater portion of the stocks traded on the
NASDAQ rose. More importantly, these stocks were bought much more recently than
those on the NYSE. This suggests that both the purchase and sale of the NASDAQ
stocks were speculative, not long-term oriented investments.
Switching to the telescope for longer time periods. Long-term
investors should focus on the changing structure of the US population, where more
than 1.8 million people left the workforce (169 million in June 2026 vs 171
million in September 2025). Some of these people trade stocks and participate
in the weekly sample survey of the American Association of the Individual
Investors (AAII). This week they turned bearish on their outlook for the next
six months, with only 29.6% now being bullish, down from 44.9% the prior week. Bearish
beliefs have risen to 42.3% from 32.9% the prior week.
Investors have generally missed gains in some global and
international funds, as well as commodity and alternative funds. To understand the
current performance of diversified funds you need to recognize the increased concentration
in a limited number of sectors. The history of making money in the stock market
often goes along with being lonely during changing long-term future trends.
One advantage of devoting time to investing is occasionally seeing
some occurrences replay. On Thursday there was the rescheduled White House
Correspondents Dinner with the President speaking, which reminded me of my time
as chair of the program committee of the New York Society of Security Analysts.
I suggested to the President of the Society that we invite President Gerald Ford,
the only non-elected president of the US to speak to the analysts. I was given
permission to invite him, with the deep belief that it wouldn’t happen. I
called the White House and spoke to the lead speech writer who thought it was a
great idea, agreeing to speak to the higher authorities. Surprisingly, they
were looking at opportunities for the President to speak to the financial
community about his “Whip Inflation Now” or “WIN”. I was invited to visit the
White House to meet with the speech writer and go over the President’s thoughts
on the subject. It became clear that they didn’t really care about my political
views, but what jokes would be appropriate. I rejected most of the jokes. Shortly
thereafter President Ford came to our meeting quarters on Williams Street. He
came with Alan Greenspan and Frank Zarb, who had just joined the Cabinet after
a career of turning around several brokerage firms. A topic I would have liked
to hear more about. When the President came to the NYSSA, he was the first
President since George Washington to speak on “Wall Street” while still in
office. He included all the proposed bad jokes.
When President Trump spoke to the correspondents this week,
he also told jokes that did not go over well. It seems as if Presidents speak about
what they want and not about what their audiences want to hear. Like many
investors, they don’t learn from history.
Those of us who pay attention to future liabilities for clients
and ourselves should focus on the long term. What do you think?
Did you miss my blog last week? Click here to read.
Mike
Lipper's Blog: Before Focusing on Shorter-Term Reactions - Weekly Blog # 950
Mike
Lipper's Blog: Little Occurred During the Trading Week - Weekly Blog # 949
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