Virtually all professional investors have long since taken their hands off the money and left their offices–either in triumph or despair. The anecdotal evidence I’m gathering suggests there’s more of the latter than usual. Since I have a growth temperament, this strikes me as weird. But apparently the consensus view was that the sharp decline of stocks in December 2018 was a harbinger of further bad times to come. Again, this strikes me as odd, but then professional money managers tend to live in gated communities with other well-off people rather than in the real world, so the information they get is highly filtered (another oddity–the gated community part, I mean).
In any event, it’s only the accountants rushing to close the books who remain in front of their computers during the last two weeks of December.
Who’s left to trade?
–retail investors doing tax planning by selling their losers
–the odd manager planning to “window dress” his portfolio by giving his large holding a(n illegal) nudge up on the final day of trading (this happens mostly in smaller foreign markets)
–people like me who are looking for interesting names being beaten down by the combination of few buyers + the need to realize tax losses.
three closing thoughts:
–4Q19 was a lot better than I thought it would be, given that there was no September-mid-October swoon driven by mutual fund/ETF yearend selling
–pundits who crow about stock strength in 2019 typically forget to mention how deep the decline in December 2018 was
–the most notable stars of recent trading have been the banks. This is a group that’s hurt by falling rates and coins money when rates are rising. This phenomenon plus the end to the bond buying panic of the summer suggest to me that securities markets have begun to believe that rates have passed their cyclical lows. What remains to be figured out is when and how fast rates will rise from here. But for equity investors stocks whose main characteristic is the dream of future profits will have a hard time in 2020.
Happy New Year!!!
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