Bulls Run Further on Fear
The pre-Summer “Sell in May” crowd is even now prepping to roll out for their annual celebration of terrible things to come.
It’s an event that we think of as ‘very good thing’.
That’s because near term market choppiness will do what it does almost every summer; build angst, create new goblins, and generally fill the air with images of a stormy future.
Embrace this process.
Fear makes bulls run further.
US Jobs Knock the Lights Out
Look at the above stats.
They mark the lowest percentage reading in a generation.
So, what's ahead?
Well, more of the same, folks, which will further confound the nervous nellies looking to grab your attention.
And let’s just remind ourselves of the importance of having to ramp up robot production sooner rather than later, because we’re going to run out of people for all these new jobs that are being created.
JOLTS shows an increase in jobs and an even lower number of people available to fill them.
Let's see how long it takes before the experts tell us all that "a good jobs report is a bad thing because it means the Fed will raise rates…"
Now for The Tough Part
Listen, somewhere during the summer haze (when it gets really, really boring) we may very well get the dreaded ‘summer swoon’.
Consider as well that since we are 1-2% away from record highs the lesson is simple; every single summer swoon before today has been a buy for long-term investors.
Let that last sentence sink in for a moment.
Are you prepared to live through this as an investor with a plan…?
In order to get this as your ‘payment’ for enduring volatility:
It's just a lesson here so don't be concerned with the details.
The upper snapshot is the Q4 panic selling, where records were set for outflows from equity funds and capital flooded into bond funds.
The second image (above) is the last 95 days or so, which takes back most of the former image.
Now just imagine how much was lost by the equity that felt concerned with market action and all the terrible news.
It has been said that if I tell you to relax, stay patient and all will be fine in the long-term, folks are likely to ignore me; or worse, consider that I don't really know what is happening.
On the other hand, if I tell you that your money is in danger, your family's interests are at severe risk, and the future is dire, then I will have your undivided attention.
So, here’s another image to consider. There have been two of these images in my lifetime: One in the 70s, and the other in the first 10 years of this century.
The question is whether you would live through this:
...to get this:
Once again, the market’s reaction is the lesson.
The name for the first image (above) is ‘a lost decade’ - when markets seem to go nowhere for many years, moving up and down and ending in the same general spot for the 10-year period.
The press loves them because they interpret these events by saying ‘the future is bleak’.
But I’m reminded of something Yoda said: “Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.”
That’s true even in markets.
By the way, all of those images (above) are snapshots from this one over the long-term:
How many Presidents were covered in this time? How many debacles? Bears? Corrections? Missed quarters? Crappy results? Upgrades? Downgrades?
Folks, don't get lost in the wastelands of Wall Street. The ones who usually lose are the ones who react poorly.
Pray for corrections instead. They are good things. Bad news often just sets the stage for solutions in the future.
In other words, pray for more problems where solutions are needed. That makes bull markets run further.
Because if you wake up one day where everything is fixed, no one needs anything, and everything is working and people are happy, then you woke up in heaven...so be careful what you wish for.