No Dog Days This Year
I know the Summer Solstice has just passed but it already feels like the middle of summer, temperature wise and of course, THE HUMIDITY!
However, we are going into the first week of July and I’m feeling a slowdown in my investment drive. I just feel like leaving everything as it is and come back sometime in September.
I missed the latest move but I am ok. I don’t mind missing a five or God Forbid , a ten percent move but it is what it is.
Being on the plus side of the ledger is always a good thing and I have learned a few things in my career. One of them is don’t bitch about profits.
What to do now though? A question that has perplexed investors for decades. Should I go back to being some research, data driven investor or should I look for cheap stocks that have lost favor?
Funny thing now is that the World of under valued, under performing stocks is getting smaller by the day.
Wait! Apple is down 19.7%. Doesn’t that qualify? Uh, what part of cheap don’t you get. Yes, Apple is not having a great year and yes, Apple is truly one of the greatest companies the World has ever seen, but is it worth lets say 225 dollars a share? It’s earning would say yes. It’s profitablilty would say yes. Everything would say yes, so why is it down? Simple. The company still produces a tremendous line up of products and it’s unseen businesses are raking it in but where is the next game changer? It doesn’t have one and the investing world loves the company and holds it like a child would hold a puppy but are investors buying more puppies,? No. I love the company, love the stock but I like what I have and do not want anymore.
I will make a very weak comparison to Microsoft. Microsoft had the World in the palm of it’s hand. Everyone was stuck with Windows. PC’s, laptops were flying off the shelves and every single one of them had Windows. The first 232 versions of Windows were pretty damn good. Their Office Suite was the foundation of every business in America. Then Apple finally figured out how to make a decent, they greta PC and an even better laptop and Microsoft tried rewriting WIndows and buying stupid companies and Windows became a joke. It sucked. Not sure what version it was but they tried making it look Apple’s systems and failed. Then something happened. Microsoft started figuring out that they still had the PC market and laptops as well, cut down on all the bullshit they added to Windows and recreated the company and now, they print money and operate with discipline.
Apple may want to take a look, great computers and sleek design will only get you so far, they innovated while others waited. Now they need to innovate and until they start launching something worth something (IPhone 77 doesn’t count) they won’t have me adding shares.
Again, I digress.
The story this summer is that there are several stories running concurrently.
It’s rare when investors have to actually pay attention to their overall portfolio during June, July and August. This year you do.
Fed decisions coming in July, might be impactful. The tariff miasma might become clear. Geopolitical events will continue to dominate news cycles.
You name it.
Plus we have the poorly named bill that president Trump is trying to ram down everyone’s throat. Not a fan.
With all this being said, the proverbial can is still being kicked down the proverbial road.
That is why I don’t like this bill. There are multiple components I do like but overall, it is Bidenomics with a stupid name. Spend more, spend more and spend more. The only difference is that there are several tax related provisions and while everyone loves keeping taxes at the same level, how do you pay for everything if there is no increase in taxes.
During the Reagan years, he reduced the tax rates for most Americans. That increased the amount of money people had to spend and it created one of the biggest booms in modern times. Bill Clinton, bless his heart, could have completely messed that up, but he didn’t. He let things continue and we had one of those rare moments in US history, a surplus.
The tax rate reductions of Trump’s first term did almost the same thing. The economy boomed. The Fed kept interest rates at near zero and every boat was floating. The Pandemic ended that and Joe Biden just put us a much bigger hole. His spending did create an expanding economy but also created massive inflation. And the debt pile just increased more and more.
This bill will spend a lot over ten years. Will it create a healthier economy? I don’t think so. Having sovereign debt like we do is not good. It’s terrible in fact and this bill will just make it worse.
I stupidly thought there would be some compromises made here and there and the numbers would shrink a bit but obviously, I was wrong. While Trump hails himself as the greatest negotiator that has ever lived, he did not negotiate a thing in this bill.
I know that in the end, this will get passed and it will be years before the true impact of the bill will be felt. It is the American way I guess, Spend till you can’t spend anymore, pay the bill later.