Practical Money
The market was mixed today, reflecting the action of last week where indecision seemed to be the theme. Today, the focus was on higher interest rates, which is why financial stocks did well today while tech lagged. Mind you, the discussion about higher interest rates have been on and off for years now. And it has been shown that a single day’s rise frequently does not hold up. That does not stop people from offering opinions though, and there were a lot of these today. It is sobering to watch the market react to a what may turn out to be nothing.
There was also talk about the government’s potential shut down, which has the market worried despite the fact that prior shutdowns have had little or no tangible impact on companies. Another miasma that infects the market.
Meanwhile, in the real world companies are dealing with real-time problems. Supply constraints which have been talked about on and off, are now becoming a major topic. It appears small companies are scrambling, particularly worried about the Christmas retail season, while larger companies are finding, sometimes expensive work arounds. And higher energy prices are hitting everywhere, much to everyone’s surprise. It appears all the hype about alternative energy and ESG has not taken into account that, practically, we still need oil and, unhappily, coal. It takes years to supplant energy sources, wishing we were green will not make it so.
It brings back to the purpose of this blog. I know there is a lot of opinion about the market, its direction, the best stocks, what is hot and what is not. But at the end of the day, the best way to invest is to be practical. Do not worry about the possible or the maybes, concentrate on the reality. Interest rates are unlikely to rise above 2% before 2022, even then it unlikely to impact most companies very much. What the government does, short of tax policy, has only selective impacts. But logistic issues and higher energy costs? They will have real impact on next quarter’s earnings and should be factored in when considering which companies to buy stocks in. Actionable reality
If you want to trade, you need to pay attention to the rumors and the headlines. The buzz and the trader talk. It is not for everyone. I think the focus on new investors would always be on the practical.
Market Today: Value stocks, those purchased for long term holding, did well today. Did not trade a lot, closed a couple calls and tech puts lanquished. Letting the market find a direction. Patience.