Notes on the market

This is an interesting excerpt from a free newsletter sent out by Vista Partners. If you are interested in them just sign up. (They also recommend low cap stocks just starting out, and it may be paid recommendations).

There are likely many reading this that paid too much attention to the book peddlers preaching gloom & doom on CNBC and other media outlets over the summer and missed this recent rally. During the “Summer of The Bear” this past summer, I recall speaking to my friend in NY and suggested to him I was sick of taking a beating in small cap names and that we were considering rotating some more of our funds to large cap. He laughed and said this is likely the bottom as he was feeling the same way and he was right.

In times of despair, it is a good idea to pick up the phone and speak/complain to someone else in the industry as they too are likely suffering and may offer morsels of wisdom and sometimes just a helpful ear to bounce off current anxiety that the market might help create.

To those reading this and sitting in cash awaiting an entry point, you may be waiting for a while as the Fed is clearly sitting on their hands as Q3 earnings were nothing to write home about. Revenue growth remains weak and one of the culprits suppressing earnings growth is a strong U.S. Dollar.

If the Fed raises interest rates, the U.S. Dollar will rise and further hamper revenue growth. Until we see a quarter or two of revenue growth out of the S&P 500, I highly doubt the Fed raises interest rates despite the recent surge in interest rates. If my thesis is correct that puts a rate hike in either September or October in 2016.

In a low rate environment, it is very hard to make a case for any sort of dramatic and sustained downturn in the equity markets. To those ready to highlight my contradiction of a bull market with non-existent or weak revenue growth, I hear you, but interest rates are ZERO and may go negative. How in the world can anyone be bearish in a zero or negative interest rate environment? The only answer, as I see it, is consumption goes off a cliff due to some exogenous shock…


Similarly, this was the top headline on marketwatch this morning -…

No way we can be near a top if that is at the top of the front page. Keep climbing the wall of worry here

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