WASHINGTON, Sept. 29, 2015 – U.S. stocks are making a feeble stab at a comeback this morning with all averages up as of 11 a.m. EDT, but then faltering and giving away those gains just half an hour later. As usual, volume is much lower on up days like this one (at least thus far), hardly making up for the latest recent bloodbath. Who knows where things will end at the 4 p.m. bell?
Perhaps stocks are rejoicing today over Donald Trump’s new U.S. income tax plans, which he unveiled yesterday. Plenty of it makes sense, although it bothers us that some 50 percent of Americans will still pay no tax at all. Mind you, we’re not against folks who, for whatever reason these days, are earning below average incomes. It’s just that when you create a constituency that really does get a free lunch, they have no realistic stake in our current financial debate. After all, they really are getting that free lunch.
Read also: Trump’s tax plan for the ‘little guy’
The Donald did hit one nail squarely on the head—namely that he’d call every kind of income, well, income. That includes capital gains for rich people. This is the way the mega-rich have long dodged a much higher tax bill while claiming out of the other side of their collective mouth that they’d be “happy to pay more taxes,” knowing full well they never will with that loophole remaining in place. (BTW, CDN columnist Mike Busler has another take on this, offering his own sensible alternative.)
In actuality, however, Trump’s new tax plan, like that of fading Republican star Jeb Bush for that matter, is probably not the stuff that’s moving markets these days, despite all the gloom and doom, HFT fun and games, Federal Reserve bafflegab and the Decline of the West under the strong leadership of Barack Hussein Obama.
But it was mostly commodities that, combined with many other crosscurrents, ganged up on the market Monday. The stock of British-Swiss global mining giant Glencore, for example, was apparently sucked into a heretofore-unseen black hole, dropping some 30 percent or thereabouts in the twinkling of an eye. In defiance of the laws of physics, shares of the stock were apparently seen peeking out of the black hole this morning, but that sighting is as yet unconfirmed.
It’s hard to get a handle on this market. Every time the Maven tries out a new idea, it fails. He’d feel worse about this, except that nearly all other longtime investors and sages have been coming up with the same results in 2015. You can’t really invest in this market. You have to trade it like a fiend. That’s what the HFTs have been doing all along, gorging on everyone else’s losses which they, in fact, have very much helped create with their Jolly Roger spoofing and front-running tactics that continue to distort markets on a massive scale.
Back in the day, any bright and alert Joe Daytrader could do this kind of thing working at home, but on a much smaller scale and without the money and backing (and trading volume) to distort markets with buckets of phony quotes submitted and then withdrawn in a nanosecond. But today, Joe’s no longer so successful at this. The HFTs pick off his trades to their advantage like they do to everyone else.
To make a long story short, in 2015, if you’re not working for an HFT firm with a supercomputer in the back office, making money has been a virtual impossibility. We’re still probably a bit overinvested here, and actually do currently have some profitable positions, notably in the volatile oil refining giant Tesoro (symbol: TSO).
We hold a few regional banks, which could warm up if the story about our occasional bank holding First Niagara (FNFG) seeking a suitor is true. But other than that, we’ve dumped most of our holdings, gone mostly to cash, and still hold onto a couple of REITs, business development companies (BDCs), one small telco—Frontier—(FTR), and a few pitiable CDs and expiring bonds.
Problem is, long-term success in investing requires that you never really totally get out of the market. But right now, for the Maven at least, that’s been a painful discipline indeed in 2015.
Hang in there. Brighter days will come, but probably not soon.
Meanwhile, in our never-ending effort to entertain, we’ve discovered a small trove of old late 19th century “Yellow Kid” cartoons. Named “Mickey” (he was Irish, of course) the Kid was a popular figure in the newspapers of that era, and his was arguably the first-ever comic strip regularly produced.
Mickey was a down-and-out more-or-less illiterate living somewhere in New York City’s lower East side. His antics, as well as those of all the other down-and-out ethnic types and lowlifes he hung around with, gave readers a humorous and satirical sampling of the lives being led by those who weren’t exactly robber barons, a bit like our lives today.
For some reason, the Kid was always attired rather strangely in a yellow nightdress, perhaps the better for the cartoonist to write slogans and one-liners on. It’s said that this yellow nightdress was the inspiration for dubbing the 19th century’s final decade “The Yellow Nineties,” and perhaps also creating the term “yellow journalism,” which was used to describe the hyper-partisan newspapers of that era which insisted on sensationalism, strong political party connections, and outright lies if they helped damage the opposition.
It occurred that our own era isn’t much different from that of the Kid. Back then, we even had a pair of “Great Recessions,” known today as the panics of 1893 and 1907. Since the past seems to be prologue, we figured it might be fun to revive the Kid, borrow a few of those old (and out of copyright) cartoons and, through the magic of Photoshop, provide the Kid with a few brand new, more contemporary slogans (along with 21st century bad grammar) to spruce up his yellow nightshirt.