This one is for me
Well folks, cheers to 100. I’m very happy to have made it to this moment and to be able too share this moment with you all. It is weird but, there becomes a sense of obligation and friendship between me (the writer) and you all (the readers) by publishing each day. You all have kept me honest and regimented and it is much appreciated.
What started out as a ‘on a whim’ decision has now turned into a serious daily routine that seeks to benefit not only the reader, but myself in increasing my financial awareness and social capital. Not only have I learned a ton not only about finance and the markets, but about networking, the interconnectedness of current events, and finding reputable information.
Finding reliable financial information (or generally unbiased, straightforward news) is difficult in 2020. I have found that there are a lot of small companies like Atom, Toggle, Koyfin, and MacroOps (links below) that are really out here providing free, reliable financial insights, commentaries, and research. You can also find research commentaries from CIOs and other c-suite officers on many investment management company websites. From there, (in combination with the news headlines and stories from places like the WSJ, FT and CNBC) you should also be able to put together a nice mosaic of what is happening in the market.
My mission has been to cut through all this fog and deliver to you all the best, most accurate, and unbiased financial commentary. From the feedback I’ve collected so far and the conversations I have had with readers, I would say that I’ve been pretty successful so far.
As I begin working shortly, I plan to maintain a hold on Market Madness, albeit on a different, less frequent, publishing schedule. That being said, I plan to continue to refine the quality, content and delivery of each edition. Once again, thank you; thank you for your continued support, encouragement, sharing and hyping up Market Madness. This platform wouldn’t be anything without the strong reader base we are growing.
Today, I am moving the Reader’s Corner up to the top because this one is for the readers as much as it is for me.
Reader’s Corner
These are what readers have been saying over these past 100 days:
“MM is an efficient way to get daily financial information.” Field: strategic HR and change management.
“MM is very informative and helpful for me.” Field: business management and HR.
“MM keeps me up to date on the trends going on in the markets.” Field: economics
“I read MM to keep in touch with the markets and to get all its happenings in an engaging, easy to read, and fun format I get daily.” Field: data analytics in insurance
“MM helps me understand the basics of finance and the big news points. within the financial markets.” Field: nursing
“I read MM each day before I clock in for work so that I have an understanding for what is going on in the financial markets and current events.” Field: finance
“I enjoy MM for the personalized take on the markets from a fellow Bentley grad, and the format is really good.” Field: valuation consulting
“MM is an easy read for someone who doesn’t know much about finance and the economy. MM provides me the understanding I look for from the financial markets.” Field: marketing and communications
Thank you to everyone who submitted feedback over these past 100 editions. It was overwhelming in the best way possible to put this edition together and I am very, very thankful for every single read, share, and piece of feedback I’ve gotten. The only way for us to go is up.
Now, without further delay, please enjoy today’s edition!
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Fundamentals
Friday’s Close:
Dow Jones: +0.44%
S&P 500: +0.77%
NASDAQ: +1.49%
U.S. Dollar Index: 93.42
US 10 YR: 0.547%
Crude OIL: $40.40
Spot Gold: $1991.90
Market Madness Portfolio: +0.72%
COVID 19 Global Cases: 17,406,644
Indices Overseas:
FTSE 100: -1.54%
Nikkei 225: -2.82%
Hang Seng: -0.47%
TEDRATE: 0.12
LIBOR (3 month): 0.25100%
A general update
Markets started this morning slated to open up, rising off the big tech earnings calls from yesterday, particularly Apple and Amazon. Investors were weighed down heavily by continued COVID 19 case increases and the stalemate that is being stretched out on Capitol Hill surrounding the next stimulus bill. Into the midday, all the major U.S. indices had red on the tape (with the exception of the NASDAQ as it continues to crush it) and at the close, the indices managed to pull out of the red and into the green!
Major overseas indices closed in the red too. Microsoft is rumored to be stepping up as a potential buyer. Volatility creeped back up, oil slipped back under $40/barrel (just for a little bit), and gold was on the rise again. Elsewhere, TikTok became the talk of the town this afternoon. Donnie raged against the company (see reader’s corner II for a laugh), threatening an order that they sell their U.S. division.
What I’ve learned (an editorial)
I think after 100 days of watching and writing about the markets I should have gleaned some reliable tips and tricks. Instead, what I’ve learned has come from one of the most volatile, unstable, and uncertain financial market time periods in my modern history. There is a huge silver lining in this time period though, at least for someone who’s been trying to learn about financial markets and stay up to date on the economy. Really quickly, I was able to hone in on indicators and trends that are really important when looking day to day, and things that are not important.
I think, more interestingly, I learned a lot about the subtleties of finance and the psychology behind market participants. Expectations are everything in finance. Everything has an expectation attached to it: economic indicators, earnings, stock price targets, commodity prices, down to line items on an income statement or balance sheet. I’ve also learned that, since the expectations are usually within the ballpark of what the actual turns out to be, it matters much more what the magnitude of the difference is between expectations and actuals versus the fact they were different.
Expectations and targets send a signal out to the market, and push a company’s or individual’s analytical ability and market prowess to the test. I’ve started to glean that expectations and speculation often ends up used over underlying fundamentals. There have been many cases over the past months (tesla, kodak, apple, and many pharma companies) that have suggested good news ahead or prospective deals to come in the future. Partly, that is the job of the folks in the c-suite to make these projections/prospects, but some appear to have little actualization capability when combined with the company fundamentals and overlapping market conditions. Granted, probably the single most vital capability by any company is to find and exploit a competitive advantage that either decreases costs or increases revenues.
Another major influence (not getting into whether it is good or bad - a piece on democratization of and open access to markets is due for another time) is the rise in retail investing, particularly speculative retail investors using options and other derivative products. The lockdowns and stimulus checks have appeared to spark a sense of trying something new, or just gambling, which has taken the form of financial market investments. After a big news break, it wouldn’t be hard to find the underlying company’s stock on a massive price swing, which consistently comes back to individual market investors all moving at the same time (the so called ‘Robinhooders’). The rise in retail investing impacts the very rigid investing and research strategies that firms and individual analysts use to study, trade, and report on stocks. Technical analysis (the use of stock chart history to capture trends and trade) has been made slightly more difficult due to the unpredictability of retail investors, and fundamental analysis (analyzing the underlying financials and credit conditions of a company to capture trends and trade), like we had mentioned before, has been stomped out due to large speculation in investments, largely attributed to retail investors.
I’ve also learned, and you’re most likely sick of it by now, is the influence with which everything is connected and intertwined with finance that exists outside of finance. We’ve all been frustratingly listening to the last 4 year’s full of trade talks and other foreign policy and foreign economic policy strategies. The economic component, more obviously, directly impacts the financial markets here in the states and also abroad. What we have also witness take on a massive financial impact has been the president’s rhetoric from just about everything he’s put on his personal agenda (nearly all of which are still work in progress or have been abandoned). It is hard to talk about the economy and finance without having some interrelated element of politics to it. Not that any of this is new under Donnie’s regime, but I’ve seemed to notice it become much more prevalent, and that could be for any number of reasons.
Outside of politics (but also related to politics and political strategies), we’ve all become more acutely aware of the financial impact of global health conditions. These are costs we’ve paid for in mounting stimulus projects, job/production loss due to economic duress, and, worst of all, human lives. All three of these things will no doubt have a lasting impact on our lives and the lives of generations to come.
One thing that I continue to come back to, but only recently mentioned in editions of MM, are Martin Zweig’s Investing Rules and how they apply to what I research, study, and think about within the realm of finance. See below:
What I’ve learned that has been most important to me of all is to find the simplicity within the chaos. I think that a lot of these rules help both professionals and individual investors make sense of their own financial goals and steps to implement, maintain, and eventually reach those goals. Essentially, it does not require deep understanding of the complexities of financial intermediation, or detailed (borderline rocket science based) models to be able to invest safely and with purpose and collect a return within the financial markets. In layperson’s terms: while the barriers to entry appear high, to enter is easy, but to master is nearly impossible (there is a massively steep learning curve the more you grow interested in the deeper inner workings of the markets)
Thank you for listening here today and everyday. I appreciate all that we have achieved here in these 100 editions, and I look forward to many more in the months, and hopefully years, to come!
Quick Takes
Big Tech’s blockbuster earnings. (via FT)
Apple crushed earnings projections and announces 4-for-1 stock split in August. (via CNBC)
COVID 19 live updates. (via NY Times)
Outlook on the U.S. Dollar. (via FT)
Coca-Cola to break into hard seltzer market with “Topo Chico” brand. (via WSJ)
Wells Fargo dumped assets to stat within Fed guidelines. (via WSJ)
Delta sends 17,000 workers home as airline gets closer to ‘minimizing furloughs.’ (via CNBC)
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Reader’s Corner II
General banter
How can I not include this!?
A good laugh to get you to the weekend.
Behind the Madness
You’ve made it through the madness. I’ve worked really hard to ensure that you leave this page having learned something, and I hope that benefits you in your daily adventure. Thank you again for checking in.
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