What we’re reading (9/2)
“Should I Sell When The Stock Market Wobbles? Some Advice” (Washington Post). “A little more than a week ago financial markets appeared on the edge of a precipice, about to be overwhelmed by the delta variant’s insidious spread and the plateauing economic recovery. Yet just days later, the S&P 500 put in back-to-back record highs. Such market tremors and uncertainty are disconcerting for market professionals. But they are particularly nerve-wracking for private investors, especially perhaps for the 15% who only began investing last year. The question for non-professional investors is, when the storm clouds gather, should you stick or twist?”
“Active Traders Are Seeing Their Account Balances Continue To Rise” (CNBC). “A new Schwab report on self-directed brokerage accounts within 401(k) plans indicates that active traders have done well in the past year. The average account balance in the Schwab Personal Choice Retirement Account in June was up by 22%, to $348,183 from $285,616 a year earlier. The report includes data collected from approximately 174,000 retirement plan participants with balances between $5,000 and $10 million. While brokerage accounts are normally associated with active traders, the average Schwab trader isn’t exactly a rabid day trader. The average account made 13.8 trades in Q2, about one trade a week, down from 19.6 in the first quarter.”
“Enjoy the Calm, But Don’t Forget Volatility” (Fisher Investments). “While they are regular occurrences, substantial pullbacks draw reams of attention—and pundits’ explanations about why more trouble must lie in store. But letting this influence your portfolio decisions generally isn’t beneficial. If you can identify a bear market—a typically lasting, fundamentally driven decline exceeding -20%—early enough, taking action can help, allowing you to sidestep negativity and buy back in at lower levels later…[b]ut sentiment-driven wiggles are much more common. Timing them is flawed strategy, in our view.”
“Home Prices And The M2 Surge” (Calafia Beach Pundit). “The M2 money supply is now (as of the end of July) about $3.7 trillion above its long-term trend line. That extra $3.7 trillion can be found almost entirely in retail bank checking and deposit accounts, all of which are readily convertible into spendable cash. We have never before seen anything like this in the monetary history of the US. We have seen things like this in Argentina, however, where soaring inflation has always been preceded and accompanied by huge growth in the money supply. Milton Friedman must be rolling over in his grave these days.”
“SPAC Rout Erases $75 Billion In Startup Value” (Wall Street Journal). “The blank-check boom has turned into a rout. More than six months after the SPAC craze crested, a broad selloff has wiped about $75 billion off the value of companies that came public through special-purpose acquisition companies, according to a Dow Jones Market Data analysis of figures from SPAC Research. A group of 137 SPACs that closed mergers by mid-February have lost 25% of their combined value. At one point last month, the pullback topped $100 billion. The analysis doesn’t include companies that hadn’t closed mergers as of mid-February or those that are no longer trading.”
