Buying USA

This commentary offers three ideas with a common theme centered on valuation.  We monitor various economic, market and political research to understand the current financial market backdrop.  We hope these topical writings share our thinking about investing in today’s environment.

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Do you know, or ever meet, a Mr. Kadiddledopper?  If so, you’d surely remember.  He is a man of opposites.  Kadiddledopper is a guy who lives in a small town, whose house looks badly in need of painting; yard needs mowing; landscaping is overgrown with tall weeds woven in; and a broken picket fence with peeling paint.  Even his clothing announces a reclusive personality.  The town folk don’t know how to relate to him.  Mr. Kadiddledopper speaks in opposites.  Understanding his talk is challenging and confusing.  “Bye. Sure is cold today,” he says when greeting you on a humid 90 degree day.  Caution when following his directions – turn left when he says go right; stop means go, and go means stop; up-town means down-town.  When he answers “no,” he really means yes, but a most peculiar exception is “Yes” always means yes.  Is there such a real-life person?  Not sure; I created my fictious guy for humorous “fun” with young grandkids.  Ever struggle with a toddler who says “no” to everything?  Try instructing them that “no” means “yes,” and “yes means “yes.”  You may still be frustrated and certain that opposites don’t work.  “Don’t try it” with your spouse, and definitely not in public!  You will discover it’s easy at first and gets harder with practice.  [Italics will denote opposites to avoid confusion.]

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Ever hear someone say “horsefeathers”?  It’s peculiar, so when it’s exclaimed a puzzled look often occurs.  “Horsefeathers” is politely spoken when something did not go right – like I made a bad pickleball shot or missed an easy putt; or a goofy mistake occurred that could be anticipated.  It’s amusing that I used this word for years and decades. As I considered using “horsefeathers” for the title of this commentary, I’m taken back by its age and origin – originating from the 1900s.  It was used in several film gags from the Marx Brothers’ (Groucho, Zeppo, Harpo, and Chico) in “Fun in Hi Skule” (1932).  “Horsefeathers” is slang for nonsense, foolishness, rubbish; indicates disbelief; like “Oh, that’s just horsefeathers, and you know it.”    Sometime in the future maybe I’ll share about Mr. Kadiddledopper, or the idea of “enjoying your snooze cruiser.”  [NOT, you may develop thoughts that I’m crazy.]

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Three-In-One: This commentary shares three shorter writings about the changing investment landscape.  We hope presenting these ideas is helpful; we share our “radar screen” as we navigate these perplexing times. – Bill Henderly, CFA, Nvest Wealth Strategies, Inc.

Price & Time

October financial market performance is often thought to be scary.  That’s because some of the worst historical drawdowns occurred in October – 1929 and 1987.  Interestingly a number of past bear markets also “died” in October of which several were also midterm election years.  Did you know, that September is more often a negative experience?  October 2022 represents the single best performance month this year for stocks and client portfolios.  It provides at least momentary respite from an otherwise trying YTD.  The financial market system may be “voting” on several changing tidbits – inflation may be peak which some think should lead to a Federal Reserve pivot or pause (but that seems unlikely before 2023); company earnings are softer but better than expected; and upcoming mid-term elections may produce Washington gridlock, a condition markets generally prefer.  The S&P500 advanced +8.1% during the month which generated positive client portfolio returns as well.  YTD returns are still decidedly negative but improved from their quarter-end market lows.

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Challenges exist for anyone playing sports when they are “behind in the count.” It’s a common experience for all athletes. Pressure builds for example, when batting with a count of “no balls and two strikes”, or behind in the football score 21-0. No competitor likes being behind, and extra effort may be pursued to bring about a positive winning outcome. Competitors strive for opportunity to succeed. Isn’t that the way with most things in life – pursue success, not failure?!

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GPS (Global Positioning Systems) offers us so much information about our surroundings and position in our world.  On a recent vacation, we used the Navigate button in our Tesla to direct us efficiently to charging stations to help us reach our goal, home.  The system calculated, like an aeronautical map used in aviation, our route with points of interest, neighborhoods, and terrain.  It took a few moments as it planned our route to avoid heavy traffic, road construction, and other hazards attempting to ensure the car would have ample charge to reach the next point – charging stations and ultimately home.  As we set off, the little red chevron that represented our car began following the planned route inching from right to left across our screen traveling west, north-west.  The map was laid out in the standard position with North locked at the top.  Our little chevron traversed across the fixed screen.   I’m not fond of that traveling presentation.  So, I pressed an icon on the top of the screen and suddenly our little chevron was fixed in the center pointing up (forward) as the map turned and moved under it!  [Being simple minded, I prefer the chevron pointing the same direction as the car is traveling.]  Which way was north, south, east west?  Did I care?  Cities, roads, and the world revolved around me!  My real concern was that we were generally traveling west, north-west toward our goal, home.

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