Our Big Board Now A Slaughter House

I watched Goldman Sachs shed 69 points, some 8% overnight. Then, there's American Express, normally a polite growth stock among the financials, giving up 26 points, nearly 9 %. All this wipe-out while the S&P 500 Index itself just down fractionally, 0.4% shrinkage. There’s Eli Lilly actually up nearly 30 points or 3%. There was money for oils but financials like Morgan Stanley flopped 7%. 

All such bloodletting keeps me invested in the low thirties and I bought more 30-year Treasuries which had a good day. I haven’t even owned Treasuries over some 50 years of investing. I have owned high yield bonds when they go into a range over 7%. So far no runs, no hits, no errors here. 

While Goldman Sachs can post a disastrous day, down 69 points, there’s money for Eli Lilly, up 29 points. Coca-Cola is an up stock, too. Buffet’s owned KO probably for 50 years with good results. Not a poor boy from the Bronx’s kind of paper. Where are the airlines? United Airlines off nearly 10% overnight? Are there any bank stocks you want to hold after seeing Citi drop 7% in a couple hours?

Markets basically face a bleak setting of overevaluation. Trump, as President, has put himself ahead of the economic well-being of our country. High tariffs push up inflation and then economic demand is liable to deconstruct markets. 

With the S&P 500 selling near 20 times projected earnings, there’s no room for expansion of price-earnings multiples on stocks. More likely is more valuation contraction that could take us down to a mid-teens valuation. Historically, this is a more liveable read on market valuation. 

When I checked my Bloomberg machine, I saw sizable shrinkage in several high proceed growth stocks like American Express, IBM, Salesforce, Microsoft and Oracle. Banks faded badly, namely, Citigroup, Morgan Guaranty Trust, et al. But, let’s not blame our President for daily downside market eruptions. Yet, tariffs play out as a deflationary force. Not exactly jingle bells. 

For a defendable property to drop a snappy 10% or so, suggests nothing is safe and secure. I do understand a stock like United Airlines or Citigroup getting its comeuppance, but not American Express. I sold most of my Eli Lilly only to watch it go contrapuntal to the market and stay buoyant. 

I understand Coca-Cola and most energy stocks running contrapuntally to a down market. Nobody's questioning their earnings power so far. Still, there’s no symmetry within stock market groups. Amazon was an up stock the day they assassinated Goldman Sachs. 

My experience with Presidents goes back to the 1930s when FDR was campaigning in the Big Apple. Roosevelt was motoring down Fifth Avenue in an open air limo. Then this 5-year old bystander tossed FDR a 6-inch American flag. It landed on his seat and Roosevelt looked out his window, saw me with my bunch of flags and smiled. How many 5-year olds get recognition from the President? 

Ah! It ain’t 1936 any longer and our standing President is not my hero. I was involved in New Jersey. Trump was then construed as an interloper who never built traction for his properties. 

Steve Wynn later developed successfully the concept of Las Vegas as a family destination resort, not just a strip of grind joints. I then sold him my interest in the Golden Nugget which he successfully built out. 

Later, I ran across Steve as a major collector of classical art. I was an early collector of Abstract Expressionism in the 1950s. Pieces today that sell for tens of millions then sold around $150,000. Like everything that is collectable you gotta be early on or prepared to pay up. In the sixties, I built my capital stake accumulating contemporary art that turned me on. 

The reason financial markets face treacherous times is just overevaluation. Trump has put himself ahead of the economic well-being of the country. FDR stands as my fondest memory.