Maximum Frustration

There are certain things in life that frustrate me to no end. Someone writing a check at the supermarket. The Chicago Bears. When I’m in an elevator and 6 people push 6 different buttons. That table in a coffee shop where people make up their drink and spend two hours tasting and mixing and tasting and mixing and I JUST WANT THE CREAM. Wait, where was I going with this? Oh yea, things that frustrate me. Those 4 are certainly high on my list but you know what else is way up there? Sideways markets. The S&P500 has basically gone nowhere for over a year now and all along the way we’ve tried to craft narratives explaining why it’s doing what it’s doing. Trade Wars, Brexit, Asia, Politics. But here’s the thing, those narratives are pointless, stock markets love to frustrate the maximum amount of people they can and holy cow are they succeeding.  

If someone were to ask me “which way are people positioned right now: for the market to rise 20% or fall 20%” I’d probably say the latter based on sentiment and positioning (check this tweet). I wonder….does the question need a third option? For the past year we’ve been stuck in neutral because growth has slowed to a crawl. Earnings growth, economic growth, my IQ growth, all of them are at idle speed and thus so is the market. There are hints that things are getting better (action in banks) but also signs of concern (action in software names). However, the US consumer is still consuming and that, more than anything else, keeps me in the optimistic camp. Has consumption slowed? Probably, there’s no doubt this endless Trade War has bled from businesses confidence into consumer confidence, but it hasn’t yet reached a tipping point. Baird’s strategy team still isn’t concerned about an imminent recession primarily for that reason.      

You know what being stuck in neutral reminds me about? That “time in the market” is better than “timing the market”. If you thought you could jump in and out of the market (you can’t) you’d be selling what looks like break downs and buying what looks like breakouts all while missing dividends and interrupting compounding unnecessarily. Dividends are a HUGE part of total return and if you’re jumping in and out you aren’t getting them. Look, this could go on for years, this doesn’t have to resolve itself on some arbitrary timeline. From 1976 to early 1980 the S&P500 went literally nowhere which is why sticking to a mediocre plan is better than a complex one you bail on because you think its not doing enough. Sideways…it’s not just a movie anymore!

News Highlights:

So I’ll admit I love the Tube in London. I don’t mind the heat and cramped quarters especially when I can get a front row seat to a live concert! I mean who among us HASN’T wanted to belt out those lyrics? WHOA OH…..

Have a good night