Good Morning,


We are over a month away from Halloween still but we have plenty of ghosts out already.  A wide swathe of the investor audience these days is a ghost rider.  We hop on the next ghost only after the former ghost never actually harmed us.  And yet, the market does not care.


Fear has become a security blanket.


So much so – we changed what we call it.


I must tell you, this is usually the time of year when we just get sloppy, downward sloping activity in the market.  I fully expected a bit more red ink – but – nada.


Sure, internal chop and some sector pushback but nothing serious given the seemingly endless reasons we could have seen worse.  Darn.  Anyway, pretty soon, the calendar headwind we covered before in your notes will turn into a calendar tailwind.  It is pleasing to see that while terrible as they unfolded, the Harvey and Irma impact in the warnings window still appears very light.


That could change but very few rumblings so far.


Interestingly, in the last week, we have seen data released showing trains, ports and truckers all doing a bang-up business.  GDP moved higher on the latest read this morning – beating expectations.  Along with that, profits for Q2 were also revised higher.  Cap that off with a new all-time high in the Transports and even the Dow Theory has erased the 483rd fear about the two averages not confirming each other.


Let’s review:

Note that last entry.  Intriguing to see multiple regional readings (post hurricanes) each add a note that they have not seen pressures from the storms.  By the way – this is all good.


As such, one would expect those AAII bullish sentiments to finally – after nearly 16,000 points of rally since March of 2009 – be coming out of the darkness and into the light.


Yes…you would think. buuuuuuut – um, no.  That bounce we saw last week evaporated quicker than rain drops on a hot summer day in Florida:



Contrarians of the world are still pinching themselves.


Here we are on the brink of yet another record setting quarterly earnings parade, record GDP output, record household net-worth, record cash flows…..and still, a full two-thirds of the investor audience is not bullish!


Please give me a couple ugly days in the market.


If we get that wish, my hunch is those bulls will be rampaging back into their foxholes at lightening speed – not to be seen or heard from again for another few thousand points.


I jest – but only slightly.  We are witnessing historic aging of the high levels of remaining  “economic uncertainty.”  I love that word set by the way – “economic uncertainty” – I suppose it sounds a lot smarter than scared sh$$less.


But here is the really scary ironclad reality one must accept:


Investing, the markets and our economy are always uncertain.


The future is always “cloudy” and it has always been that way.


One hundred years ago when the Dow was 81 – the future was just as cloudy as it is today.


For anyone keeping records, 7 more weeks of this and it will have been a full three years since the last time we saw bullish sentiment over 50%!


In Summary


DC remains, well – DC.  Look for those knuckleheads to still shoot each other in the foot at every corner.  Notice however, that history has once again been proven correct:  the markets tend to do just fine when DC is in the tank and being completely ineffective.  Business usually does just fine when government stays out of the way.


That is NOT a political statement – just a collective observation.




Slow and steady still wins this race friends.  No way around that.


As Ken likes to say, we need to remain focused on demographics – not economics.


The former creates the latter.


Demographics Rule The Long-Term Game


Planning is critical as always.  Stay focused on the right pitch.  It is early in the game.


The important part?


Long-term currents – not short-term, emotional waves.


One more thing:  Pray for a correction.


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