Gridlock is great. My motto is, ‘Don’t just do something. Stand there.’ William Safire
In any endeavor, those who are beginners are typically afforded a bit of a break by others who have a little more ‘seasoning.’ When you are a student in a lower school grade like kindergarten or first grade, the teachers are more ‘nurturing’ than when a student is in junior high or high school. A new salesperson with a company learns the rope from a more experienced representative. When it comes to investing, it is considered appropriate to start small, maybe without any money, and then work your way up to throwing down your hard earned cash with a small amount. In that light, when inexperienced investors begin, they often have the expectation that the first few days after they buy something it should rocket to the moon. As one builds their book of hard knocks, you quickly discover immediate gratification with investing seldom takes place. In fact, and I have mentioned this several times, it probably is a good sign that a stock goes down when you initially buy it. You might even get into the habit of not even looking at a stock for the first six months after you buy it because that will help eliminate the expectation of something good happening quickly. Personally, I have discovered that a great deal of my gains came years after initially purchasing a stock. You are going to have quite a few situations where a specific company has very little movement, or continues to go down. One of the other interesting truths about investing, especially with small companies, is they can often do nothing for quite a long time, and then in a week explode higher. In the vast majority of the cases, it is because the company posts very strong financial results. The results lead the performance, and if you remember this correlation, it makes investing a much easier thing to understand.
In the markets this week, the October jobs report came in strong as the economy added 638 thousand jobs. The unemployment rate is now under 7%, which is a good thing, especially as the country awaits approval of vaccines for Covid 19. High profile earnings winners included Paypal, Qualcomm, Godaddy, Square, and Zillow. All posted results which exceeded market expectations. Investors digested the results of the election with optimism as Senate control by the Republicans seems probable, although it will await two Georgia special elections that will be decided in January. The House of Representatives moved towards the middle as Republicans will pick up at least ten seats. So much for the blue wave. From a political standpoint, both parties face serious strategic issues. The Democrats underperformed and their move to the left cost them House seats and it appears they remain in the minority in the Senate. The moderates and far left will battle for party control, and Speaker Pelosi may face a serious challenge for her position. Now, let’s turn to the Republican side.
It turns out that President Trump will wind up being a hero to Republicans regardless of whether or not he wins reelection. Clearly, right now it does not look good on that front. Nonetheless, with a newfound respect by those not traditionally attracted to the grand old party, namely Hispanics and African americans, Republicans have a chance to build on the coalition of workers and minorities to expand their tent in the future. As for Mr. Biden, I believe his efforts to be a healer for the nation will be ignored and mocked by Republicans for as long as he is in office, if he indeed becomes the President. He will be viewed in the same light by Republicans as Trump was seen by Democrats. Of course, it is still premature to grant him the Presidency as plenty of legal challenges remain. So, the nation probably will be at a standstill for quite some time, and investors will have to adjust to this reality.
Thank you for reading the blog this week, and if you have any questions about investing, please email me at email@example.com.
Get all Y H & C Investments Weekly Blogs and Monthly Newsletters by sharing your information below-
Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog, Investing in securities involves risk and the potential loss of ones principal. Past performance is no guarantee of future results. All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation. The fact that Yale Bock has earned the right to use the CFA designation does not mean Y H & C Investments will outperform broad market indexes.