Investors, they are leaving, again.

They will be back.

And when they do, we will be here.

We will be here at higher prices, when the coast is again considered “clear.”

The future will look “bright” at that point, and the experts will “feel better” and “more confident about what is ahead...”

It’s a cycle that has been unfolding since the beginning of time, and one that is unlikely to ever change.

And that’s a good thing for long-term investors.

As was the bounce on Friday and the bad news over the weekend – the media just cannot seem to find enough to attack the White House about.

In doing so they risk numbing the minds of the audience and losing them altogether.

The Sentimental Stuff

Quater Hell Chart1

Here’s a bit of perspective for you: At the peak levels of fear during the 2008-2009 crisis, we got down to a “12” on this reading. 

Now we’re sitting at an “8” and have spent the last two weeks below “12.” 

That means investors are not only more afraid now than in 2008-2009, but also during all other periods since then; including the start of 2016, when the markets began the year over 13% in the red. 


Now here’s an even better one for you.

It’s a survey question over the weekend on CNBC (classic stuff guys).

By the autumn it should be worth a serious chuckle:

Quater Hell Chart2

Focus on the Facts - Not the Fiction

So, the “quarter from hell” as it’s been referred to is officially in the books.

And just how spoiled have we become that a quarter which is down just a few percentage points, following two solid years of gains, is somehow monstrous?

In fact, “hell” is only the first negative quarter in the past nine, and the first negative Q1 for the year since 2009…which, by the way, was not a bad time to be a buyer.

I suggest we get more focused and better accustomed to reality, because we’re likely to see a lot more of it.

Renewed market chop and wide-ranging activity is both positive and very good for long-term foundation building in the averages.

Besides, the higher these prices rise, as they are set to do over the long-term, the more this perceived “volatility” will set in. 

Buy your “altitude sickness” bags now – they’re likely to be littering the investing landscaping for the next few decades to come. 

The visible signs of this seem clear as Q1 came to a close.

…And As For Q2…

I would not be at all surprised to see a bit more of the same. 

Indeed, I think we may need to prep ourselves for one of those lengthy trade ranges that will make exactly zero people happy, and only make any sort of sense in the rear view mirror.

…And As For The Data…


And by the way; as for all that bitching about high education costs, well, we’d better find a way to get these kids educated and graduated a little more quickly as we are running out of humans to fill demand. 

And you were thinking robots would kill jobs?

The land of the future will need robots just for the mundane jobs so that humans can do the more exciting ones. 

…And As For Earnings…

The updates are solid. Heck, even Walgreen’s, one of the first to announce, was a tiny bit off in their early declaration of what benefits they would see from the new tax laws. 

In the spry weeks of January, when many companies were announcing bottom-line impact, they suggested theirs would be “$200 Million in 2018 alone…”

Uh, well, they were off a bit…by about 75%. 

It seems that in their latest assessments, quarterly filings show the number expanded to $350,000,000.

Just imagine for a moment how many more positive surprises like that are ahead as the benefits continue to trickle in, and business is unleashed from eight years of a brutal and reckless experiment in socialism under the previous administrations rules and regulations. 

Now to some of the latest data from Thomson Reuters (by the numbers):

• Forward 4-quarter estimate: $158.14

• P.E. ratio: 16.7x

• PEG ratio: 0.81x

• S&P 500 earnings yield: 5.99%

• Year-over-year growth of forward estimate: +20.74%

Folks, let’s pray for more of this choppiness and angst, shall we?

Mike Williams
Founder and Managing Partner of Genesis Asset Management, New York

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