“There is a time to go long. There is a time to go short. And there is a time to go fishing.”
– Jesse Livermore
– Jesse Livermore
Dad and I have both talked about Jesse Livermore in the past. Although he may be considered the original “day trader,” which is counter to how we invest, he profited and failed as a stock trader from his study of the psychology, emotions, and behavior of people. He understood that the short-term movements of the market, especially the extreme movements, were due to the temperament of people. One of his greatest accomplishments was knowing when he just needed to leave things be for a time, and just go fishing.
I hope everyone’s summer has started out well. I know many of you have gone on vacation or are planning upcoming trips. Summer, even when you’re older and can’t completely take a break from the major demands in life as you could while a kid, is still the time for getting away. It is still the time to remember the possibility of being free to experience yourself in the universe without the messy baggage of societal demands.
I am going to try to keep this letter short. My family went to the beach last week. Craig is on vacation now, and Libby is going to the Invest in Women Conference in Atlanta next week, which although work-related is still enjoyable to her. Don’t worry – she is very disciplined and demanding when it comes to making sure she gets her vacation time too! So, we are all making sure to get a little downtime, but are staying quite busy as well.
The markets are uncomfortable, and the news is relentless in letting us know it. I watched Jerome Powell’s conference this week, and I get summaries of presidential presentations and inputs from all the talking heads, and I simply can’t stand how almost everyone, especially the reporters, want to be the first and loudest in criticizing and trying to place blame. Everyone is going for blood too… they don’t want to hear about a series of events that were out of anyone’s control. They don’t want to hear about dedication and hard work in trying to make things better. They simply want someone to persecute.
Times are rough, and there is further roughness ahead. The relentless blame and negativity crowds us all into the doldrums. As is often the case though, it pushes us further than reality warrants. As I’ve told many of you, while I am an optimist about the future, I am not simply viewing things through rose-colored glasses. I fight my cynical tendencies daily, and in so doing am consistently surprised to find we are often wrong about how bad anything is or can be. We over-do it. Luke Bryan released a great song back in 2017 titled Most People Are Good. It was a great slap in my face the first time I heard it, counteracting that cynicism that creeps up on me.
So, the point of this letter is to first offer a comparison to you all of how we’re doing in contrast to the markets you are seeing on the news. Although all of your accounts and allocations are different, we are not anywhere as bad as the greater markets are. Second, for all of the bad headline statistics that are so popular now, there are still plenty of positive statistics that aren’t being handed out easily to us… you have to hunt for them. Third, I want to tell you our simple plan going forward and why it makes sense to us.
Market Year-to-date Returns
The following are a group of index returns I update daily to see how various markets are performing. Not all investments are the same, not all stocks are the same, and I need to stay updated on how we are doing relative to the world. These are all year-to-date as of June 15th, 2022.
I am going to try to keep this letter short. My family went to the beach last week. Craig is on vacation now, and Libby is going to the Invest in Women Conference in Atlanta next week, which although work-related is still enjoyable to her. Don’t worry – she is very disciplined and demanding when it comes to making sure she gets her vacation time too! So, we are all making sure to get a little downtime, but are staying quite busy as well.
The markets are uncomfortable, and the news is relentless in letting us know it. I watched Jerome Powell’s conference this week, and I get summaries of presidential presentations and inputs from all the talking heads, and I simply can’t stand how almost everyone, especially the reporters, want to be the first and loudest in criticizing and trying to place blame. Everyone is going for blood too… they don’t want to hear about a series of events that were out of anyone’s control. They don’t want to hear about dedication and hard work in trying to make things better. They simply want someone to persecute.
Times are rough, and there is further roughness ahead. The relentless blame and negativity crowds us all into the doldrums. As is often the case though, it pushes us further than reality warrants. As I’ve told many of you, while I am an optimist about the future, I am not simply viewing things through rose-colored glasses. I fight my cynical tendencies daily, and in so doing am consistently surprised to find we are often wrong about how bad anything is or can be. We over-do it. Luke Bryan released a great song back in 2017 titled Most People Are Good. It was a great slap in my face the first time I heard it, counteracting that cynicism that creeps up on me.
So, the point of this letter is to first offer a comparison to you all of how we’re doing in contrast to the markets you are seeing on the news. Although all of your accounts and allocations are different, we are not anywhere as bad as the greater markets are. Second, for all of the bad headline statistics that are so popular now, there are still plenty of positive statistics that aren’t being handed out easily to us… you have to hunt for them. Third, I want to tell you our simple plan going forward and why it makes sense to us.
Market Year-to-date Returns
The following are a group of index returns I update daily to see how various markets are performing. Not all investments are the same, not all stocks are the same, and I need to stay updated on how we are doing relative to the world. These are all year-to-date as of June 15th, 2022.
- -20.48% - The S&P 500
- -15.60% - The Dow Jones Industrial Average
- -29.06% - The NASDAQ Composite
- -22.22% - Wilshire 500 Total Market Index (Average of most stocks in U.S. Markets)
- -20.42% - Value Line Geometric Index (Average stocks easily visible to most investors)
- -28.51% - Russell 1000 Growth Index (Growth stocks)
- -13.31% - Russell 1000 Value Index (Value stocks)
- -11.70% - Bloomberg Us Aggregate Bond Index (Taxable, Investment Grade Bond Market)
This gives you the opportunity to compare your portfolio to many of the various broad options available to investors. We will always be willing to discuss your portfolio with you, so if this sparks questions give us a call.
Negative Sentiment – Good stuff happening
I now want to share some of the hard-to-find good stuff happening that often gets kicked under the rug while all the negative stuff gets pushed to forefront. But first, to show how most of us are currently feeling, here are two recent, well known and conducted survey results.
Based on a joint Wall Street Journal and National Opinion Research Center poll, Americans currently register the highest levels of economic and financial dissatisfaction since 1972 when they first started these polls. These results are worse than when the survey was given during the aftermath of the 2008 Global Financial Crisis, when millions were losing their homes and the jobless rate was in double digits.
Also, based on the most recent American Association of Individual Investors’ survey, which is done weekly, optimism about the stock market dropped below 20% four times in the past seven weeks. This sentiment makes sense considering the news, but what doesn’t make sense is that it never dropped below 20% even once during the entire COVID-19 crash of 2020. Things today are not worse than they were when the economy was forcefully shut down, positive COVID case numbers and deaths were higher each day, and we didn’t have a vaccine. On that note, here are some positive statistics:
Negative Sentiment – Good stuff happening
I now want to share some of the hard-to-find good stuff happening that often gets kicked under the rug while all the negative stuff gets pushed to forefront. But first, to show how most of us are currently feeling, here are two recent, well known and conducted survey results.
Based on a joint Wall Street Journal and National Opinion Research Center poll, Americans currently register the highest levels of economic and financial dissatisfaction since 1972 when they first started these polls. These results are worse than when the survey was given during the aftermath of the 2008 Global Financial Crisis, when millions were losing their homes and the jobless rate was in double digits.
Also, based on the most recent American Association of Individual Investors’ survey, which is done weekly, optimism about the stock market dropped below 20% four times in the past seven weeks. This sentiment makes sense considering the news, but what doesn’t make sense is that it never dropped below 20% even once during the entire COVID-19 crash of 2020. Things today are not worse than they were when the economy was forcefully shut down, positive COVID case numbers and deaths were higher each day, and we didn’t have a vaccine. On that note, here are some positive statistics:
- Consumer spending increased 0.9% in April
- Employers added 390,000 new jobs in May, Wages increased 5.2%
- Year-over-year job additions from May were 400,000 per month, strongest period of gains since 1939
- Unemployment remains at 3.6% (10%+ during financial crisis and the pandemic)
- U.S. Manufacturing Purchasing Mangers’ Index (PMI) has increased for 24 months in a row
- U.S. Services PMI has increased 24 months in a row
- Retailers cut 61,000 jobs in May, while Leisure and hospitality added 84,000 employees
What we are doing
Finally, I’ll share our plans. We will continue to hold the quality companies we own with future earnings capability, but will make switches based on bargain offerings the market decline has offered us, and will continue buying new attractive offerings. We will target earnings yields that are above the inflation rate. We do this by identifying companies that were sold off enough that their forward earnings are now offered to us cheap enough, who are still strong companies able to compete in the future markets. We will also continue to invest a growing portion of our cash into Certificates of Deposit and U.S. Treasuries. As the FED raises rates, yields on the safest investments go up, and we will continue to capture those increasing yields. Once rates on CDs and Treasuries are high enough, it will warrant an overall allocation change between riskier stocks and these less risky fixed offerings. We will update you when we believe that larger allocation shift is warranted.
I tried to keep this letter a little shorter, but as you all know I inherited Dad’s willingness to talk, and his endurance. I usually (sometimes successfully), try to give everyone an opportunity to talk too. So, as I always leave off… we are here and always ready and willing to address your thoughts, concerns, and questions.
I wish you all the best,
Justin Anderson
Finally, I’ll share our plans. We will continue to hold the quality companies we own with future earnings capability, but will make switches based on bargain offerings the market decline has offered us, and will continue buying new attractive offerings. We will target earnings yields that are above the inflation rate. We do this by identifying companies that were sold off enough that their forward earnings are now offered to us cheap enough, who are still strong companies able to compete in the future markets. We will also continue to invest a growing portion of our cash into Certificates of Deposit and U.S. Treasuries. As the FED raises rates, yields on the safest investments go up, and we will continue to capture those increasing yields. Once rates on CDs and Treasuries are high enough, it will warrant an overall allocation change between riskier stocks and these less risky fixed offerings. We will update you when we believe that larger allocation shift is warranted.
I tried to keep this letter a little shorter, but as you all know I inherited Dad’s willingness to talk, and his endurance. I usually (sometimes successfully), try to give everyone an opportunity to talk too. So, as I always leave off… we are here and always ready and willing to address your thoughts, concerns, and questions.
I wish you all the best,
Justin Anderson
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