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Day 254: Uncertainty is a Friend


Mother's Little Helper portfolio was UP today +2,454.75 (+0.31%).

Overall GAIN YTD: +$206,343.58 (+35.34%).

According to CNN Money our benchmark index, the S&P 500 is up +10.13% Year To Date. http://money.cnn.com/data/markets/sandp/

I'm Certain I'm Uncertain

In a previous post I discussed how average investors are taking volatility out of the market and wreaking havoc on professional fund managers. My premise is that professionals thrive on volatility and use it to their advantage. I was asked if I still put aluminum foil on my windows and maintain a subscription to Conspiracy Theory Weekly. Sometimes it's lonely on this end of the keyboard. Regardless I maintain my conviction that volatility is a friend.

Certainty doesn't really exist in the stock market.

You can have greater conviction that you're more right than wrong;

but certainty, like 'internet privacy' is fleeting and maybe non-existent.

- Clay Baker

North Korea?

When the market sold off yesterday I saw a number of articles and financial news shows proclaiming that uncertainty over North Korea was making investors nervous. Yeah…no.

We’ve been watching North Korea unfold for a long time, investors should have already priced in North Korea. Even if they launch an armed missile, how far will any nation let it go before shooting it down? The last missile wasn’t shot down because tracking showed it wasn’t going to hit anything. I think we got this one.

Hurricanes?

There are lots of talking heads who all proclaim its uncertainty over Hurricane Harvey and Irma that drove markets lower. Yeah…no, not so much. Besides we need to focus on the human toll and help those in need. If you're a giver please give. If you're an investor please invest in what helps the people in distress.

The Debt Ceiling? Lack of Tax Reform? D.A.C.A? Healthcare?

The wall of worry gets higher all the time. While any one of these topics and many more are important and need thoughtful people to make informed, wise decisions I can only respond on this blog from the viewpoint of how any of this impacts and moves markets. Because the question that plagues most people is, "How does the effect me"? Simple, it all scares you, if it doesn't you're not paying attention. Do what you can on the issues where you have passion and knowledge to protect others or support those that do. With respect to your investments, the resource that protects you and your family, stay calm and pragmatic, choose wisely, stay invested for the long haul. Every credible study shows that investors habits and not the the funds they invest in determine investor results. Laymen's terms; stop jumping in and out of the market because some thing scared you!

There’s a ton of stuff going on in the world that seems to be causing havoc and it’s just a little too easy to point the finger and proclaim that you’ve found the reason for the market to sell off; “There lies uncertainty”. We want certainty because that makes us comfortable, let's all try to get over that.

Personally, I think the reason the markets sold off a little is just because nothing is happening. The markets have been driven by earnings and earnings season is basically over, for now. Geo-political events and weather are causing some money to rotate from one group of investments into another, but there aren’t a lot of catalysts right now to drive the market. For the most part investors have priced in all the geo-political and havoc events and have generally shrugged off these events as unimportant to their investments. With one exception, healthcare stocks. A couple of take overs, some positive results and a few FDA approvals have driven up several pharmaceutical stocks; some dramatically.

What I’m Certain I’m Certain About

Markets move, expect that. Markets are organic organisms that have to grow with populations and the constant flow of goods and services, this is messy. Along the way there will be down cycles where the market as a whole pulls back viciously and shakes out all those who can’t endure, expect that and decide to endure. Eventually the market always comes back to neutral, prices get restored to proper valuations and eventually the market grows some more.

Stay Invested

Clay Baker

Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.

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