These days, Las Vegas resorts feature a little bit of everything — dazzling, high-production-value shows …big-name entertainers … five-star restaurants backed by celebrity chefs, you name it. But let’s be honest. Vegas is still a town that gaming built.
So if you want to have the best chance of making it home with a few bucks in your pocket, you have to play the odds. Don’t throw all your cash down on games where the house advantage is huge. Instead, focus on those like blackjack where the odds are much better for you.
There are plenty of differences between gaming and investing, of course. But that principle of “playing the odds” is important for both.
|Investing isn’t exactly gambling, but you do want to play the odds.|
For instance, I’ve been talking a lot about the credit and economic cycles. I’ve argued that we’re past the peak expansionary period for both. I’ve also highlighted how a wide variety of asset prices got wildly inflated, but are now starting to deflate. And I’ve pointed out that we just experienced the second-longest bull market run in U.S. stock market history.
Now, does any of that guarantee the stock market is going to fall apart? No. But does it tilt the odds in your favor, assuming you’re looking to profit from downside moves via inverse ETFs, put options, short sales, or other similar strategies and investments? You bet!
|“I’m continuing to advocate a cautious stance for your core investment money.”|
So I’m continuing to advocate a cautious stance for your core investment money … and continuing to look for overvalued, vulnerable turkeys that deserve to get plucked. I’m finding more and more of the latter these days, given where we are in the cycle, and I’ll have more details for you here and in my investment services.
Until then, see you in the desert! Or if you can’t join me, please do share your thoughts about this market environment in the discussion section. I’ll do my best to respond to as many comments as I can.
Last Friday’s jobs report was weak as I expected, with the headline job-creation number missing estimates by a wide margin. Stocks managed to reverse early losses and finish modestly in the green … which prompted many of you to weigh in on what you expect to happen next.
Reader Gordon said: “We seem to be in a ‘follow the leader’ environment/mentality with regard to stock markets. The Dow goes up, Asia and Europe follow. Markets seem to have lost any attachment to what is happening in their own back yard while tying their can to American markets.
“The Dow goes up because the oil market goes up, and I fail to see the reasoning in this. It’s almost like Dow investors are clutching at straws or throwing darts at a WSJ financial page. Friday’s U.S. market activity was puzzling because the jobs report came in terrible, yet the market went up.”
Reader Jim suggested that’s because investors don’t know what else to buy. His comments: “The Dow is still holding up, I believe, because of ZIRP. With low CD and bond yields, there isn’t an alternative.”
Reader Solly R. said it’s important not to get too negative on stocks, regardless of the lousy data: “This column does a GREAT job of laying out the economic fundamentals, and status of the underpinnings of the market and economies. However, it tends to be overly pessimistic and cautious at times.
“While the pessimism was being preached and followed the last few months, big gains and profits were made in the market. I, for one, prospered at two intervals and exited with profits intact prior to falls.”
Finally, Reader Will referenced my column on economic cycles and the chart it contained by saying: “We are in the ‘Late’ session of expansion. Normally, I should say we are getting to be very late here. But with the Brexit vote and the U.S. elections still coming up this year, every effort is being made to kick the fine line between ‘expansion’ and ‘contraction’ down the road.
“Expecting the current expansion to continue for much longer is putting a lot of faith on the powers that be, though. Do they really have enough nets to contain every black swan for much longer?”
Thanks for jumping into this debate. The market action on Friday isn’t all that surprising, as “Jobs Fridays” are often volatile and marked by strange shifts and reversals. But I don’t believe the longer-term chart picture has changed one bit.
Plus, the figures themselves confirm that the last area of strength in the U.S. economy – the job market – is now starting to deteriorate. That will cause the weakness in sectors like tech, financials, and materials to spread further into consumer discretionary, autos, housing, and other sectors dependent on strong consumer spending.
Of course, that’s just my take. Please share yours in the comments section when you get a minute.
Saudi Arabia replaced its longstanding oil minister Ali al-Naimi over the weekend, one of many policy moves by an increasingly assertive Deputy Crown Prince Mohammad bin Salman. For oil investors, the important thing to know is that the new minister, Khalid al-Falih, plans to continue the Saudi plan of oversupplying the market rather than curtailing production to support prices.
A devastating Canadian wildfire has plagued residents of Fort McMurray, Alberta, and surrounding areas for several days now. But some cooler weather and a bit of rain helped slow its spread yesterday. The fire has consumed 390,000 acres in Canada’s oil sands country, as well as several hundred homes. It also forced the evacuation of almost 90,000 residents.
I know you’re shocked to hear this. But Greece is still facing debt trouble, is still sparring with its bailout lenders over terms tied to new financing, and Greek citizens are still protesting in the streets . Greece needs help to make a July debt payment, and the International Monetary Fund wants Eurozone countries to offer some debt relief. But Germany and other creditor nations don’t want to be too generous unless and until Greece enacts even deeper budget and pension cuts.
Now the economic slump is getting serious. Orders for private aircraft, such as richly appointed business jets, tanked 16% in the first quarter. The value of airplane billings fell to $3.53 billion from $4.2 billion a year earlier, the biggest drop in a half-decade according to Bloomberg. Guess more business execs will be flying coach!
What do you think about the latest oil market machinations in Saudi Arabia? How about the never-ending Greek debt negotiations? And in all seriousness, is the downturn in business jet orders a negative signal for the U.S. economy? Let me hear about it below.
Until next time,