I definitely recommend reading the piece on Sir John Templeton. Anyone who has bought a mutual fund has probably at least heard of Franklin Templeton… but they probably know very little about the person who founded the company.
In recent weeks there have been many quotes from institutions hinting that “the top is in” and that the market was overvalued. Many in the media took this to mean that the time to sell was now as retail investors were beginning to get back into the market, which historically has meant the market is closer to the end of a run rather than the beginning of a new one. Everyone wants to listen to the all-knowing, all-seeing “smart money” (even though the “smarties” have been getting their ass kicked this year).
So, just how different from retail investors are the institutions in recent times? Well, according to the ICI data on Money Market assets ….not very different at all. In fact, if institutions really believe the market is overvalued, it appears retail began collecting cash at a faster rate than they did.
Now, I’m not going to go out on a limb and say retail investors are a great indicator for the markets, but it is interesting to see how similar the money market activity for these two classes has been as of late. It is my opinion that since the latest recession, retail investors have been much more cautious with their money and aren’t willing to just throw themselves into the ring and go on with their lives. This data tends to agree with that opinion for now. If this bull market continues, will we eventually see a divergence between the two investors?
Good morning and I hope your morning hasn’t been filled with as many zombie-like mistakes as mine has. Being a Steelers fan is never easy on Mondays and Tuesdays once football season rolls around due to the amount of prime-time games we play (yes, I do watch pre-season). Being a Steelers fan is never easy as of late, regardless… but I digress.
And finally, I want to leave you with this great post by Mr. Brown over at The Reformed Broker (if you aren’t reading this blog you are doing yourself a disservice). There are a lot of worries about the US market at the moment and this post goes over what the different stages of a drop in the market are and how they are classified. The post also covers a bit of historical information about drops in the market which are very helpful. I personally like how he describes what a 50% drop feels like.
It’s only fair that SPDR Man makes an appearance in regards to what’s going on in the market today and what happened back in June. If you haven’t seen this meme before… check it out. You won’t be disappointed unless you have no sense of humor.
The market is selling off on good news today due to “fears” that the FED will have to taper sooner than later. Quite honestly, I’m in the sane boat that believes good economic news is a positive for the markets in the long run… fuck me, right?
The amount of emotional baggage investors carry during times like these can be detrimental to a portfolio’s long term performance. All of a sudden the knowledge we’ve accumulated over the years is meaningless as the urge to sell becomes too much to ignore. When you start to worry, you should ask yourself if you’ll regret your decision to sell 3-5 years from now, not 3-5 weeks from now.
Instead of hitting the panic button, stick to your script, your philosophy, your plan, whatever you call it. Take profits from your out-performers and re-allocate to those getting beat up by the market. If everything is getting beat to shit, re-allocate to those getting hit the hardest. You built a diversified portfolio for a reason. To lose sight of that due to short-term noise will only create bigger problems down the road. Those who remain calm and persistent will reach their goals in the end, and those who act on a whim will generally never be satisfied as they let themselves be consumed by the “what ifs.”
Aside from all of the noise out there, here are some things I enjoyed reading this morning:
While retail sales missed estimates, they still increased in July for the 4th consecutive month. It appears US consumers are not hesitating to spend and with back-to-school spending on the horizon, followed by the holidays (they’re almost here already… yikes!), I would be surprised to see any major hiccups in consumption for the remainder of 2013.
Here are some articles that help to build on this optimistic outlook I currently have: