Not only are we coming up on our fifth year anniversary on Sept. 1, but today we are publishing our 1100th post. It has been an interesting and self-educational ride. We hope it has been entertaining for you all as well.
This post will be a potpourri of thoughts, comments and quotes. Just a little fun for the day.
First, the market. The stock market, that is. It is giving a superb illustration of trading fibrillation – type of arrhythmia.
In hearts, an arrhythmia is a problem with the rate or rhythm of the heartbeat. During an arrhythmia, the heart can beat too fast, too slow, or with an irregular rhythm. Rapid, disorganized electrical signals cause fibrillation, or contracting very fast and irregularly.
In markets, especially commodity (including stock in publicly traded companies) trading, there is a problem caused by conflicting information coming in fast, overwhelming traders and causing trades to be made without sufficient, good information.
Think of information as electrical signals. When the signals are confused (Chinese yuan devalued, oil prices going down, improving earnings reports, peace breaks out), the market swings both up and down increase in speed and value.
Another way to look at markets comes from an analyst IFO admires and would love to meet. Greg Donaldson, a founder of Donaldson Capital, is a fan of investing in companies that have increasing dividends. His company blog is on our blog roll – we highly recommend it.
A couple of days ago, he wrote a column on causes of the fibrillation we have been talking about here, though he uses different terminology.
“If you haven’t been invested in the right sector or had a decent amount of your portfolio in just a few high growth stocks, it is unlikely that your portfolio has kept up with the S&P 500,” he writes.
“Nothing illustrates this more than the acronym FANG, which stands for the darlings of 2015: Facebook, Amazon, Netflix, and Google. As a whole, these stocks have accounted for more than 75% of the S&P 500’s returns year-to-date.”
He then proceeds to list three reasons why it probably isn’t a good idea to invest in these companies. Of course, you can decide for yourself whether you agree with him. We’ll just say we find his reasoning compelling.
And so ends our lesson for today – see you tomorrow for post #1101 – that’s 13 in binary.