Sound judgment, with discernment is the best of seers.Euripides
Many people like action, excitement, the idea they should do something at all times. Others prefer peace and quiet, with calmness and serenity a more pleasant environment. Naturally, one’s attitude about perpetual activity versus stillness is subjective and dependent on all kinds of factors. Over the course of one’s life, it makes sense that how one views these states could depend on your age and what is taking place in your life. My own experience is that when I was young, I very much was attracted to activity. As I have grown older, inevitably, the joy of quiet and solitude takes precedence over nearly anything not family related. It may not appear obvious, but in the investment world, understanding which state of being is more your cup of team matters a great deal because it will affect the method you invest your hard earned capital. Let’s drill down a bit on that, shall we?
Factually, we know that over 60% of all market volumes are traded either passively or algorithmic ally. Two years ago, JP Morgan estimated that only 10% of all investors were buying based on business fundamentals. Looking at those numbers, if we take the algorithmic group, they are implemented by machines. If your personality is geared towards activity, naturally it makes sense to find a way to incorporate algorithmic trading into your investment approach. It certainly is available as nearly every on line broker offers some kind of method to invest using algos. If you are in the minority and prefer to dig down into a company and its business, then it might make sense to have more of a buy and hold approach as that is more consistent with a less active, calmer method. My own feeling and style has always been towards the latter, in some cases proving detrimental, but I can live with those problems. It is important to realize there are all kinds of different investors in markets, and they have their own unique reasons for investing. In many cases, they will be vastly different than yours. Some individuals invest for income, others for capital appreciation, and there might be a third group seeking a combination of the two. Endowments and foundations have different time horizons than venture capital funds, private equity groups or hedge funds, and all probably invest with their own methods at the forefront of what they are trying to accomplish. Once you eliminate what you don’t want to do, it becomes easier to consider what is important and how to go about it. Investing is an iterative process in that you can refine your methods as you gain more experience and knowledge, and use prior experiences to hopefully help in the future. Euripides was immortalized for his dramatic tragedy in Greek storytelling, and his wise words ring true today many hundreds of years later.
In the markets this week, the hate love, love hate relationship between the United States and China continues to have markets on edge regarding the ultimate outcome between the two countries. Many of these issues are critically important, especially in technology related industries. The week’s focus was on Huawei and how sanctions by the United States can affect the telecommunications and networking industries, along with retaliation by China on any number of technology concerns, especially those related to the semiconductor area. Oil took it on the chin with a buildup of inventory the most notable cause, and in a related segment, fears about Tesla’s competition, demand for its cars, and lingering questions about its production and cash burn all weighed on that stock. Mr. Musk got a big win here in Las Vegas with the award of a 48 million dollar contract to his Boring company for moving people at conventions. A few weeks ago, Beyond Meat went public and naturally, it has now been awarded with a five billion dollar market value. The meat alternative is seen as having a bright future and plenty of growth ahead of it. A more apt name could be Beyond Belief with the current price awarded to its shares. Elsewhere, Target posted an impressive number while Foot Locker disappointed badly. Retail remains a stock pickers grave yard as recent winners Kohl and Macy’s also struggled (Nordstroms too). Trying to decide where to allocate capital in the ultra-competitive areas in so many parts of the market is challenging, and nowhere more so than retail, be it grocery shopping, clothing, sporting goods, or department stores. It is tough in stock picking land folks, its tough. Finally, as the country celebrates its fallen heroes on Monday, I hope everyone has an exciting or relaxing Memorial Day, whichever you prefer.
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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 Chartered Financial Analyst in no way means or guarantee performance better than market indexes.