On the Comeback Trail
"Most people want to avoid pain, and discipline is usually painful."
- John C. Maxwell
As we close out the next to last week of summer, the oft-prayed-for market setback has yet to materialise.
To me this suggests far stronger internal long-term strength than we realise, which can easily fool the herd.
Stay focused on the larger events and the underlying current driving the massive benefits ahead - for the US economy in particular.
You can click here to watch a short video that explains all of that!
Folks, the uglier the stock market disruption the longer the comeback tends to be, based often on new services, new efficiencies, new perspectives, and new lessons learned.
Rest assured that the entire decade ahead will ripple with these types of disruptions, and the world around us will look unrecognisable ten years from now…in a good way.
So, What's Going Right?
Long-term investors learn over time that a positive perspective pays dividends.
No, that does not mean wearing rose-coloured glasses or that we don’t accept setbacks when they happen. It means that we focus on the recovery and we focus on ingenuity.
In America we are running out of homes to buy – an endgame I’ve been repeating would happen for a long time now. Builders will be busy for at least the next decade. That’s because America’s Generation Y has 88 million kids who are just beginning to buy their own homes.
Visualise a starting line in a marathon just before the gun signals the start of the race. Now watch as that corral of runners crosses the starting line for the next 20 years.
Inventories are squeezed everywhere. We’ll need several quarters of increasing production just to fill inventories back up to even the thin 28-day supply we saw in January "pre-Covid."
Oh, and incomes, bizarrely, are up.
Even the data just released last week was "better than expected":
Now, we’ve already seen how earnings were better than expected – to the extreme.
And investor sentiment?
Well, maybe the best news of all is that it still stinks. Records are being set each week as the data continues to show that the crowd does not like stocks.
The latest data from AAII still shows more bears than bulls.
Remember folks, it’s not about what’s happening right now with this current depth of concern and despair.
It’s about what happens next:
Realise that it takes a great deal of change to make a six-month average of anything move in a particular direction.
Now look at the distance (above) between extreme lows, and then the subsequent highs in the past compared to now.
Methinks a few weeks of setback and corrective action would set the stage nicely for the rest of the year.