A lot of very sharp people called for "the top" in the markets this past week. 

They are considered to simply be too high, overpriced and are not supposed to work this way.  

Oh, and here is the record of “market top callers” thus far for your files.

(It’s a little outdated but you get the point.)

Patience Chart1

Yet, at the same time it was reported that some of the biggest heavyweights in the hedge fund world are continuing to have appalling years – with some still in the red.  

Sad reality? 

Well, there’s good news and bad news. 


The good news:  Patience works for you over time.

The bad news:  Patience works for you over time.

About All Those Records....

It can be confusing listening to headlines speaking about record breaking markets.

Worse still is trying figure out which index is being referenced is the true picture of the market.

The answers can be puzzling. 

If you look at an equally-weighted S&P 500, you would use say, the RSP. 

It shows a gain YTD of 8.33%. 

The NYSE Composite, which is the broadest of measurements, shows a YTD gain of 8.39%.

The Skew?   

Five stocks in the S&P 500 represent almost 22% of this year's gains. 

Apple alone holds slightly over 12% of the entire gain of the S&P 500. 

And the passive ETF world (wonderful marketers) is steadily turning investors into robots - even if they do not yet understand the mechanics. 

Another patient way of looking at this is through the SPY, which reached an early summer high on June 9 at a high price of 245.01. 

It then went into a lull for a few weeks, but closed last Friday at 247.41 (after multiple new highs). 

The difference? A move of $2.40, or 0.975 percent higher than the early summer high.  

Now, I’m pointing this out to you because the chatter about "records" can often confuse and instil more fear that "the big one" is surely closing in on us.

Well, thanks very much for that, but we’ll stick to our knitting and focus on the Barbell Economy. It moves up and down, and to and fro at times. 

However, it has historically tended to keep you focused on the important growth elements over time.  


There is still the chilling concern that rates are about to explode and that the Fed will somehow topple us all. 

My hunch? 

We’re done with rate hikes for now.  

It’s market fear that drives rates, and the world remains awash in that fear.

Just look at the 10-year yields. That’s TEN years, folks. No upside, just interest:

Patience Chart2

And the real mind-bender here is that this is early in the cycle, and it’s a long game.  

The generational dynamics moving through our economy are setting the pace for decades to come, not weeks or months.  

With more than $10 Trillion sitting scared in the bank, trillions more in bonds and passive ETF's, and sentiment still weighted abnormally bearish, we are nowhere near that period. 

Think demographics, not economics. 

Mike Williams
Founder and Managing Partner

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