Good Morning,

 

First of all – and most important:

 

Happy 4th of July Weekend Holiday to You and Yours!

WE HOPE YOU HAVE A TON OF FUN!

 

I think if I hear another reference to a coming Black Swan event, I am going to be ill. The thing too many forget is that once you call it a Black Swan, it is not a Black Swan anymore.

 

No matter, sentiment still falls.  Good news again in the latest AAII sentiment data – it is bearish – meaning bullish in a contrary sense.  Let’s see the data first and then read on below the charts.

As I stated last week, “If we keep seeing chop, I will not be surprised at all to see the 20’s again soon on bullish readings.”  And here we are at 29.7%.  If the chop and internal churn we saw yesterday goes into the half day on Monday, I think we can easily expect even lower bullish sentiment readings in the next survey midweek.  By the way – this is excellent news for long-term investors.

 

Net net – the first chart above shows the obvious:  In terms of bullish sentiment, optimism declined this week falling from 32.65% down to 29.71. In case you are keeping track, that is now a record 130 straight week where more than half of the investor audience surveyed was not bullish.

 

Now what is really kind of striking is the “neutral camp” oddly enough.  Notice the second chart above.  See where the current reading is now over 43?  That is the highest since last August.

 

In my experience, often these “neutrals” end up being bears on any little step down so it will be interesting to watch after yesterday’s action.

 

This is the classic – “Oh I better leave before the summer swoon comes in…” thinking. A part of the psychological mind games which Charlie Munger covered in his video clip I sent along earlier this week.  I hope you took a few minutes to watch it – the points were very compelling even if a little discomforting to hear.

 

Basically, we play tricks on ourselves.

 

Like I always said, when it comes to the long-term goal of building wealth, we have met the enemy – and they are us.

 

Really Odd

 

Now, in a contrary sense, all this lack of excitement over the markets continues to be the very support for the markets’ lack of significant pullbacks.  The fact that all seem to be fretting over when “it” will come is actually the protein the bull needs for energy if you will.

 

While all those shenanigan’s are unfolding, you may have missed several of the more powerful indicators coming out in the last 48 hours.

 

Here are a few – but first, recall, I suggested that we might expect to have some weak numbers merely because people will be on vacation.  Ha – well, good news:  that did not seem to bother the Chicago PMI data at all – that’s a big miss – to the good side by the way.

 

And retail sales?  Just fine thanks…:

So What?

 

Many still sit and ponder what it all means.  Just my two cents worth here, but I have a hunch that the masses are WAAAY over-thinking this process.

 

The data make it clear:  significant growth waves are headed toward our economy.

 

Why?  Lots and lots of people becoming adults.  Now, we can disagree, we can worry about how others interpret the data, we can fret over minute-by-minute headlines or we can simply get on our surfboard, paddle out into the break – and ride the waves.

 

They’re coming – the Barbell effect can be ignored if so chosen.  Those who ignored this demographically-driven data in the late 70’s/early 80’s were completely mystified by the 20-year secular bull run in the 80’s and 90’s.

 

Today, based on the hard data of noted sentiment results and the – oh, $9.3 trillion sitting in the bank – I am pretty sure they are ignoring it again.  Add the massive rush still flowing immediately into bonds or bond funds on any 2-3 day setback in markets – and one can cut the fear with a knife.

 

It still brews just under the surface with massive bearishness a mere 1,000 points in selling away.  Mind you, 1,000 points today at Dow 21,000 is a hiccup.  Today’s teenagers likely see 4-digit moves on a regular basis in their investing lifetime.

 

So relax.  Sure it is choppy – it is supposed to be – it’s summer.

 

Enjoy your long weekend.  There is plenty of summer haze and chop still to live through, just like every summer. Lots of churn, way too many political mistakes, with even more to come as we get closer to the August doldrums.

 

Our focus remains the same:

 

Pray for a summer swoon.

 

Think demographics – not economics – we are in far better shape than the vast majority of investors currently perceives.

 

HAPPY 4TH TO YOU AND YOURS!!

 

Enjoy the beach plans ahead and time with loved ones and friends – be well and please travel safe!

 

Until we see you again, may your journey be grand and your legacy significant.