The Important Stuff

Few people if any predicted the market turmoil that kicked off the start of 2016.

Like the old warning about the lull before the storm, we're seeing more rhetoric along those lines going into next year. As a WSJ financial columnist pointed out in this weekend edition, you have to go back to 2010 to find another August slower than the first seven months of this year.

Some are calling this the lull before the lull. Others, as it frequently turns out, make this more-of-the-same mistake. Average daily volume in August was below that of the first seven months. To be sure, August is viewed by many as a vacation month. Volatility minus a few false grunts and groan has been AWOL. The election is another reason cited. Hold this puppy together until after November. Then there's the old saw about which political party is best for the stock markets, Democrat rather than Republican?

Some heavy, heavy hitters have come out foretelling their net short positions. Warning signs or something else? The war between the fiat money changers and the gold crowd continues. Proletariat publications like Money Magazine hawk investment opportunities outside the U.S.  Europe is one place. Calmness, like panic, is catching, a close brethren of more of the same. Lurking in the shadows, however, is the meme that just battening down and staying fully invested makes the most money in the long run, notwithstanding Keynes' warning about long runs,

Will it be a stock picker's market? That, if so, at least in part implies the return a current market stepchild, active versus passive asset management. Investors have plowed deeply into ETF funds. For the most part, the only thing active about them is the money plowing into them. The Fed has gone through a litany of dots, the latest being jobs, that were suppose to tell the tale. When is dull soothing? Right now is as good an answer as any. What's even a better question is why would anyone of sound mind believe those job numbers, non-farm payroll or otherwise?

Our guess is the Fed could hike interest rates 25 basis points Tuesday and except for some short term volatility not many investors would lose more than a night or two of partial sleep. There might even be a huge market sucking sound of relief. Big Daddy Pharma most likely wouldn't like it as millions could cancel their anti-anxiety prescriptions. Another Brexit moment .Despite all of its time in the cynosure, the Fed is now irrelevant. They have done what many accuse Donald Trump of, self-branding. Main stream media and a gaggle of economists whose jobs depend on it are the only ones paying any attention to the Fed. If you choose to do so, it's a financial form of cutting your own throat just to watch yourself bleed.

You want to look for something else, something different. Maybe something like Trump wins, Hilary has an out of body religious experience causing her post-coma to tell the real truth and Barbara Streisand actually leaves the country. One of the reasons most investors fail or get lackluster results is they don't pay enough attention to the important stuff.