This Thanksgiving Day will bring market valuations for which investors will share no bounty. Markets have continued to tank. Some volatility that helped traders. Tech stocks, particular AAPL and the other FANG stocks got mauled.
Let’s rehash where we are. The paragraphs below chart the declines of October:
A. DJIA. The Dow began October at 26,500. As of the 30th, it has dropped to 24,649.
B. S&P 500. The S&P started October at a little over 2900. It has since fallen to 2,659.
C. NASDQ. This index stood near 8,000 on October 1 and has since dropped to 6700.
Bringing this chart current will plot the further fall:
1. The DJIA now stands at 4,464.69, on November 20th, below that the price that began the month.
2. The S&P 500 is at 2,649.93, again below the monthly start of 2659.
3. Finally, the NSDQ comes in on the 20th of November at 6,972 down from 6,700.
WE AIN’T SEEN NOTHING YET?
As traders, the Authors do not track follow indices. We are aware of trends and prices burps. But as traders, we watch the charts, not the MSNBC Chyrons. But of course to each his own. More of this later…
In last month’s issue of this newsletter, we addressed some strategies that more active investors and traders can consider. But as we noted, these strategies are risky and somewhat complicated.
BUY AND HOLD …
The Authors frequently note that the “buy and hold” strategy that most all financial professionals and investors follow. There are three Huge (Gee, where did the Author Rob get this?) problems with this strategy. Let’s take a look:
1. Historical Bear and Bull Secular Markets. Over time, markets move in multiple year swings from Bear Market to Bull Market. These are called Secular Cycles. (In this case the term “secular” does not refer to nonreligious. It refers to time.) Generally, the markets crank higher, but for certain periods of time, such as 1930 to 1950, and 1968 to 1981. If these are the years in which you are investing, times were lean. Imagine making your nest egg in 1968 and then trying to retire in style while the market falls.
2. Certain events can make investors call on their funds early. Unreimbursed healthcare expenditures can wipe people out. Again, if your returns have fallen, you have a risk of losing relative more.
3. Loss of compounding effects. I have $100 invested. I lose 25% and my investment falls to $75. I want to get back up to $100. But because of the amount of my loss, a 25% return will not bring me back to $100. I now have $75 and need an increase of $25 to return to $100. But 25% of $ 75 will only bring me up to $93.75. ($75 + ($75 * .25=18.75). To get to $100, I will need to get a 33% return. $75 * .33 = $25. $75 + $25 = $100. If you lose 50%, your $100 falls to $50, you will now need a 100% return to come back up to $100.
NEW PRODUCTS FROM DESERT OF THE REAL ECONOMICS STRATEGIC INVESTMENTS
The new products just keep rolling out the proverbial “door,” often just one move ahead of the federal prison door. Last month we added two more indicators to our Black Box Barometer-The Dumber Neighbor Distribution Derivative and the trump iPhone Irrelevancy Oscillator. Sales of the Black Box Barometer economic and finance production engine are breaking all sales goals. Our broker-dealers in Kazakhstan, Syria, Yemen, South Sudan, Uzbekistan and Mongolia have been very successful in selling Black Box Barometer subscriptions to reluctant government officials who are broker-dealers have blackmailed.
Our Russian consultant Petrov “Potemkin Village” Vasilovitch, along with his ex-KGB comrades, have plied leaders from these countries with alcohol, drugs, and the promise of wet sheet sex. Video cameras hidden in the walls and ceilings of the trump tower suites do the rest of the work.
NEW PRODUCT LAUNCH: PRE-LANDFILL COLLECTIBLES
One of our affiliates visits many estate sales and often comments about the gullibility of people to spend thousands, perhaps tens of thousands of dollars, on country chic “collectibles”. Things such as Franklin Mint Plate collector plates and “Limited Releases of classic US coins “bathed” in 24 K gold. *
Our affiliate recently went to a sale where the deceased had accumulated over 1,000 Beany Babies. These 1990s stuffed collectibles have long since faded from financial fame. Now, you can hardly give them away.
Everyday the airways and general interest magazines aimed at older Americans hawk the collector plates, phony gold coins and display-box toys. Our retail analyst has identified these faux collectibles renamed them call pre-“Landfill Collectibles.” Basically, the landfills will eventually “collect” them.
This new company, which our affiliate “Storage Unit” Stern will operate, will perform three valuable services. First, the company will contract cheap landfill space in rural areas and the Deep South, where most of these pre-Landfill Collectibles have and will be sold.
Secondly, we will arrange pick up from the owner of the pre-Landfill Collectible so they do not have to suffer the embarrassment of hauling away the junk craptonite that fueled their dreams of retirement in the Ozarks.
Finally, Pre-Landfill Collectibles will distribute advertising material and samples of new, soon to be Pre-Landfill collectibles for the various vendors such as Franklin Mint.
YOU WILL NEVER BE CHEATED IN THE DESERT OF THE REAL. MOST PEOPLE ARE GOOD ENOUGH AT CHEATING THEMSELVES.
*Cabbage Patch Dolls were all the rage in 1983. But they still have some value. Each doll came with a birth certificate. Undocumented immigrants can use the Cabbage Patch Dolls’ birth certificates to obtain SS#, drivers licenses and passports.