No Dance Steps Shape A Herky, Jerky Market

Microsoft sold down 48 points on its earnings release, a big surprise. Growth in its cloud division slowed unexpectedly. 

Nobody ever promised a rose garden would bloom and light up my day. I’ve dealt more often with garbage men who rattled up a storm with my refuse cans. 

You’re not supposed to fall head over heels for a stock because its middle name could be Disappointment. Maybe Apple or Microsoft can carry you for a couple or years, but sooner or later they do disappoint. Earnings peak, revenues top out, fierce competition comes from Japanese producers like Sony and Nikon. 

Your investment world can fall apart and stocks that everyone believed should sell at 40 times earnings now sell at 10 times earnings.  As if they produced toilet seats, not agile cameras. 

I remember how I used to promise clients that Polaroid and Xerox would appreciate 2%, monthly. And so they did, year by year. Then, the music stopped. Japanese producers like Nikon and Sony fielded competitive cameras. Then, high speed Xerography machines churned out sheets in color at high speed. Their low cost took over the printing market. 

I was there, Charlie! One of the first 914 copiers to hit Wall Street houses landed in our offices because we knew the Xerox management. Then, we watched as secretaries from all floors lined up to make Xerox copies of their work. Haloid was no longer a chemicals producer trading OTC.  I think it traded at 15 times earnings, highly regarded but a pure, back-woods chemicals property. 

Let’s face it. Today, I'm a 94 year-old. I may still have the brain power to follow the guy who makes electric cars, but don’t choose to bank his game. I’ve read all his proxy statements over the years that have documented Elon Musk’s share grants.  They gave him control of Tesla. I’ve noted, too, that Tesla is one snappy trader. It can do some 50 million shares by lunchtime and reach to a 100 million share day. 

TESLA Over the Years

After reaching its high near 500 this year Tesla has retracted much of its gain, some 15%. The stock traded as high as 400 in 2021. I could find a toilet seat manufacturer with a better 5-year chart. General Motors just reported a terrific quarter. The stock has advanced 71%, year-to-date. Everyone’s bullish on GM because it shows good numbers. 

Finally, I looked at my portfolio’s invested position. I’m at 30% long, where I’ve been all year. I don’t ever remember being so underweighted for so long. 

What would make me become more invested? Maybe,  the neutralization of Donald Trump. I can’t make the case for a big change in our President’s stretch. He needs to be voted out of office, but that’s not around the corner. 

There’s an old saying “My country, right or wrong, but my country.” At the least, I fought for my country in the Korean War and was later called up  in the Berlin Crisis. The young Trump got a note from his doctor attesting to his unfitness for military service. The expression “ Life is unfair” may apply here.