Equities start the day higher as we hit NEW…ALL…TIME…HIGHS. Man, I’ve been waiting a long time to type that sentence, so long that I forgot what it feels like. What exactly does it feel like? Well my friends imagine sitting on a beach with your toes in the sand, listening to Yacht Rock radio sippin on a cold beer. Mmmmm, that’s heaven right there (I’m gonna do a whole Yacht Rock themed recap one day). 213 days have passed, 147 trading days, since we last touched this lofty level in the S&P but guess what, that’s a good thing, what you just experienced was a correction thru time. That’s right, markets correct thru time or price, and you just lived thru the former. See all of this noise? That’s a reset of market expectations, a reset of sentiment and exactly what we needed after that blowoff top in January. What else is hitting new highs? How about Transports, small caps, an equal wtd Nasdaq, an equal wtd S&P, the Wilshire 5000, and my weight after drinking 500 white claws the past few weeks (who knew they are still 100 calories per can). I mean what’s not to like about the market right now: earnings growth has brought down valuations, all the trade war/tariff nonsense has kept bullish enthusiasm from getting out of hand, the equal weighted indices making news highs means it’s not just a few stocks, the most important piece of macro data (unemployment) is still making multi decade lows, and clients I speak with (both institutional and retail) aren’t acting like Brewster after his great uncle died (if you don’t get this reference we can’t be friends anymore). Longest bull market of all time? Who cares. All that matters is your behavior in it, that’s the one thing you can control.
After the open we boarded the good ship Take ‘em Up as the Dow soared past 26k, the Nadaq 8k, and the S&P to 2,899. Across the board breakouts and you know what the best part of all this is? There’s no resistance anymore, we are in clean air. Discretionary, Health Care, and Tech, all booming, if we could get Industrials and Financials to join the party then a whole lotta Bears are gonna be jumping off that mountain I just showed you. Let’s move on from all this chit chat and talk stocks. AMD rose another 5% today (+150% YTD) and if you wanna see what a morse code chart looks like check this one out. What’s the record for most consecutive gaps up? Unreal. Trump made some fresh hot deal with Mexico so all the auto stocks worked (F+ 3% GM +4.5%), banks did well because economic optimism is back baby (GS+3.5%, MS +3.5%), and FANG ripped because the market was open. Losers were UAA -4%, because, like GE, it can never really get itself going, and all of the following because they’ve been up so much lately: JWN -2.5% ADSK -1.8% KSS -2.5% and CMG -4.5%. By lunch we were quietly trading near the highs, 2,896 +0.75%. Do you even know how good Yacht Rock radio is? Are you onto this yet? If you haven’t been listening to the pearly tones of Bertie Higgins, Michael McDonald, and Christopher Cross as summer winds down then I don’t even know what to say. The canvas can do miracles.. (check my Spotify list here).
We spent the rest of the day trading sideways on the highs and if you’ve managed to avoid all the pitfalls that come with investing you are being rewarded with a white hot PnL. So what are we looking for now? What happens next? Well, again, we’d like to see Financials and Industrials catch up but we’d also like to see a retest of the old highs (around 2,870), have that hold, and then see the market put it definitively in the rear view mirror. We need to see how bullish resolve is at these lofty levels. Before we move on to the links I wanted to end this section with a brief snippet from Sen John McCain’s farewell letter. In it he says a great many things about his life and service to his country, but this one passage resonates:
"We are three-hundred-and-twenty-five million opinionated, vociferous individuals. We argue and compete and sometimes even vilify each other in our raucous public debates. But we have always had so much more in common with each other than in disagreement. If only we remember that and give each other the benefit of the presumption that we all love our country we will get through these challenging times. We will come through them stronger than before. We always do”.
Thank you for your service Senator and for reminding me that no matter what this great Nation will endure. When I sit down at my desk my only goal is to help our clients reach theirs and I do that regardless of who sits in the Oval office or what party controls the government. I, like my fellow citizens, will do everything in our power to add to the storied history of the United States of America.
Final Score: Dow +1%, S&P500 +0.7%, Nasdaq +0.9%, Rus2k +0.15%
- Succinct Summation of the Day’s Events: Last week of summer so it’s a bit slow, but we saw follow thru from Friday’s breakout. New All-time highs across the board.
- Great quote about Advisors here: “Clients respond to advisers who practice what Oechsli calls “the three Cs”: concise; conversational, and confident. When an adviser doesn’t talk too much, listens well, and radiates enthusiasm and warmth, clients come away with a lasting positive impression.”
- This “RISK RADAR” by Nomura is quite awesome. Well done guys
- Whether you like it or not, luck plays a huge part in your success: “This idea that both skill and luck play a role in nearly every outcome, including the careers of the most successful investors in the world, is a powerful one. Once you recognize that luck or chance, whatever the amount, is important makes you view the world in very different ways. You can no longer look at the cover of a business magazine featuring a Fortune 500 CEO or hot startup founder the same way again”.
- Good macro musings from D Schawel: Indeed it is plausible that the economic cycle lasts longer than most participants think will occur. Residential fixed investment is historically low, excesses from oil/shale were flushed out in late ‘15/early ’16, a healthy private sector surplus exists, and the consumer looks to be in a very strong position at the moment. Moreover, we haven’t seen such pro-cyclical fiscal stimulus like we’re seeing with the recent tax reform. From a psychological perspective, animal spirits are alive and well with some combination of greed and fear of missing out permeating the minds of investors from mom and pop to lagging hedge fund”
- As a history buff I love this necklace
- I mean could you even walk down this?
- Ok guys, football season is upon you, let’s make this on Saturday and this on Sunday
- I get a kick out of GSElevators “How to Dress like a real Man” articles. Especially this quote: “Leave a jacket on the back of your desk chair so people can never be 100% sure if you’ve left early for the day or are taking a long lunch”.
- One last article for all my advisors out there. Look, we all have the same information now, there’s no advantage to be had, but that’s not what sells anymore. Clients will always need help overcoming their inherent biases: “Whether we were using fires, drums, men, pigeons, horses, boats, wires, or satellites to send and receive information, people have always been the constant. While the technology has changed, the people haven’t. All investing comes back to arbitraging human nature. Why? Because it’s in your nature to sell during a panic. It’s in your nature to buy when everyone else is buying. It’s in your nature to make every behavioral mistake that exists out there”.
We’ll end tonight on something I’ve never been able to do. No, not skydiving, solving a rubiks cube. This guy does both.
Have a good night