WASHINGTON, May 18, 2017 – Whether you’re writing about stocks, bonds, business, entertainment, sports, whatever, in today’s USA it all seems to turn into politics.
Blame it on the cable/internet 24/7 news cycle, the desperation for clicks, page views or Nielsens, or the fantasies of clueless leftists who think they won election 2016. But whatever the case, somehow the play, the concert, the show, the book, the neighborly conversation all ends up focusing on politics. It’s a situation that’s getting hazardous to your health, as there’s seemingly no escaping the nonsense, even if your life depended on it.
And so it goes with an investor’s life today. We all used to peruse P&L statements, tally up PE ratios, pore over the daily, weekly and monthly charts, read up on the latest assessments of stock analysts and make presumably rational decisions on buying or selling securities. Right, there were (and are) always imponderables and surprises, but diligent research would usually provide a serious investor with enough more wins than losses to justify all the work.
Today, however, more than ever, the numbers seem less relevant than the machinations of HFTs on one hand, and the often violent ubiquity of politics on the other. The latter, in its own way, is more capricious, since you never know when another unnerving terrorist attack or pre-planned political-media hit-job will hit the wires and drive markets nuts.
Wednesday’s nonstop, allegedly bad news about the phony Trump-Russia meme shifted the HFTs’ supercomputers into high gear, blasting nearly all stock sectors violently into the red zone on the basis of wild and anonymously “sourced” political stories that somehow put President Trump’s growth agenda into retreat.
That negative action, which scared the bejeebers out of most investors, making the hit even worse, carried over into today’s trading action at the opening bell. It looked like another instant replay. But then, all of a sudden, the sun came out and Wham! Stocks reversed course.
As we write this short article, around 3:15 p.m. ET Thursday, the widely followed Dow Jones Industrial Average (DJIA) is up a robust 100 points or thereabouts, with the S&P 500 and the NASDAQ even doing slightly better. All were down sharply in early trading.
So far this after, we note that Thursday’s action in the Dow has been swinging back and forth like it’s bouncing on a bungee cord. The DJIA is currently oscillating within a roughly 200 point trading range, plus or minus. Technically speaking, that’s nuts. But that’s what you get when a bunch of computers create pre-programmed panic on news they’re programmed not to like whether the “news” is really true or not.
Don’t get us wrong. There’s always been headline risk in the wonderful world of investing. But the proliferation of fake headlines in recent months has only made things worse and more unpredictable for hardworking, earnest brokers, investors and traders alike who recognize that in the best of all possible worlds, stocks should be trading on earnings, product offerings and merit rather than on non-related crap. But, as Kurt Vonnegut once wrote, “So it goes.”
We’re basically sitting tight today, hoping the market won’t lose its sanity or positive momentum when the HFTs hit the usual 3:59 p.m. “sell” button. But you never know. And taking an educated guess in such a market is often the first step in a months-long investing disaster.
So we’re keeping our cool for now, and wishing that those who control Washington and the Federal government in our adopted home town would learn some responsibility and finally achieve some semblance of adulthood. That might bring prosperity to us all.