There’s a lot going on in the markets. Some dynamics are linear and pretty easy to interpret, others not so much. It’s important to walk through them and then we’ll revisit via a video the important difference between Tactical investing and Buy&Hold.
Before we dive into the variables, take a look at this chart, because it’s why I titled this blog: Buying on the Dips is a great way to make money…until it isn’t.
Have you seen the new Lionel Richie TDAmeritrade commercial, where two guys are trying to get the singer to say “All night long”, as in now with TD you can trade stocks outside of the typical 9:30am EST to 4:00pm time frame? This offering was attempted several years back by another brokerage firm, but it didn’t catch on. Will it work this time?
Not that any of you reading this are itching to buy Apple or short Tesla while watching Late Night, but it is an opportunity to build on my last couple of blogs where we discussed liquidity and some of the interesting dynamics surrounding it.
Look at this picture. Let me ask you a couple questions.
I just finished up teaching a Retirement Planning class at Fairfield University. I generally ask at the beginning of class how many of the attendees had some level of motivation to sign up because the 2008 collapse remains in the back of their mind. With teaching this course for the past 4 years, I would say over half the people raised their hand and did so with legitimate concern on their face. But this most recent class, I witnessed a lot of shrugs, “Eh, that was 10 years ago.”
My gut is that it’s less about the time frame and more the double digit returns the markets provided in 2017. Now, this blog isn’t going to be a Debbie Downer about the market and economy. I’m actually quite happy with the growth of corporate revenue and earnings, dramatically lower unemployment, Trump’s implementation of promises and yes, I believe what he’s doing with Tariff’s is not only brilliant, but necessary.
In the Spring of 1998 I was having lunch at an outdoor restaurant in Stockholm Sweden, while on break from a Wall Street analyst meeting. As I was about to enjoy another bite of crispbread, I watched a guy walk up to a vending machine, point his phone and click - a pack of cigarettes dropped out. I put my food down, literally rubbed my eyes and turned to my colleague next to me and asked incredulously, “Did you see that?” My associate was too busy gawking at the natural blonde women at a table across from us, so I was left with my own thoughts: Why can’t we do this back in the United States? Obviously, this is universal technology, how can Sweden be so far ahead of us?
There's a famous story about how Joe Kennedy (John F.’s father, who was ruthless and manipulative as he was wealthy) avoided the 1929 stock market crash. He said that when his shoeshine boy gave him some stock tips, he knew it was time to get out. I believe Joe had a bit more inside knowledge that instigated his timely exit before the greatest meltdown in stock market history. So, a question before us is, should we pay attention to what ‘certain’ investors or institutions do with their money? I will argue yes, but let’s come back to this in a bit.