Market Turbulence, Back to the Future & Finding Value in the “President's Day” Sale
Tariff Talk and Market Movements
I have read many articles this week explaining what tariffs are and why they are or are not a good idea. Then I heard how taxing a remote penguin-inhabited island is a strategic pre-emptive measure in times of a national emergency, so I thought I’d stop there, pivot a little, and share with you what I was up to a week ago, and what I'm thinking today.
Market Drops and Flight Plans
A week ago, I was boarding a plane, enjoying a little snack before my flight. I looked at the news, and apart from continued tariff talk, I didn't see anything requiring immediate attention. After a second glance, I saw the major US indices were down some 5%. Well, that's not something that happens every day; as a matter of fact, we've seen only a handful of days with anything like it: after 9/11, in the midst of the housing market collapse, and during the global pandemic. My flight was ready to board, but the story was only emerging and about to get a lot more interesting.
Reading Time in the Air
I usually take time in the air to read, and I had Barry Ritholtz's book (the host of Bloomberg’s Masters in Business podcast) "How NOT to Invest" with me. Barry and I will speak in the coming weeks. His book is full of advice on what not to do — one suggestion is not to worry too much about end-of-the-world news, and another is not to trust those who try to predict the future, among other golden nuggets.
Flight Delays and Diversions
The internet was spotty on my brief flight, and my peace was interrupted by an announcement of a likely delay, followed by a diversion to another airport. Just like the 5% market moves, flights don't get diverted too often. It was the second such incident for me in a week of domestic travel—so much for the standard distribution of such events! Where are the statisticians when we need them? The reason for the change of flight was none other than the instigator of the tariff spat himself. His helicopter had a wheel malfunction. He couldn't take off, we couldn't land, while the markets were searching for a firm footing. There is humor in there somewhere.
A Brief Digital Sanctuary
When you're up in the air, it feels like the world down below doesn't exist for a while. There was a time, not long ago, when flights had no Wi-Fi. This offers a momentary sanctuary from the constant flow of information, especially welcome lately. It wasn't a long break for passengers of my flight as the headline maker's omnipresence reached us even up there in the sky. He took off, we landed, markets closed, and just like my two diversions in a week, the following day marked another 5% drop.
Rare Events in Succession
If markets taught me anything, it's that a statistically rare occurrence can happen one after another sometimes, and one may actually make it easier for the following to happen. That's the peculiar nature of the invention that brings together anonymous crowds to exchange ownership of businesses — the stock market.
Big Money, Big Moves: Where Real Value Meets the Stock Market
This week, I released my earlier podcast conversation with Samantha McLemore, who spent 20 years working side by side with investing legend Bill Miller. He taught her that big money is made in the big moves—stocks held over a long time, benefiting from some significant change and improvement.
Our conversation and last week’s market debacle made me think that money is not really "made" in the stock market.
The companies we own operate global businesses that provide value, earn profits, and make money, and their stock prices are merely reflections of their real-world success. Stock prices eventually move in line with the value of the underlying businesses. On days when the market misjudges that value and prices companies too low, we pay attention and search for those big moves that Bill Miller has looked for throughout his career.
Unintentional Market Timing
Earlier this year, around mid-February, I was writing an article about the challenges of deploying new or idle capital during rising markets. I put that essay on hold and finished it only early last week, a day before the 10% two-day cumulative drop. The article was scheduled and released when I was getting diverted due to someone's wheel malfunction.
The timing of those posts can be amusing that way. I had no way of knowing that a sudden correction was in the works for us. It's not the first time that my readers told me my writing was perfectly timely, but it's hardly ever intentional. I'm trying to write something evergreen, but the context changes and renders content both timely and timeless on occasion.
Back to the Future Moment
How does the market feel a week later? If I were to explain to someone who lost their phone, watched no news, and has no chatty neighbor, I'd say it feels like we rewound the clock back to the earlier half of 2024. It's a back-to-the-future moment, just like the 1980s movie theme. Don't get too excited; the market is back to where we were, but everything else appears to be exactly where we left it off.
The President's Day Sale
Here we are: I'm back on the ground, the tariff spat continues, and the stocks have hesitantly found that firmer footing for the time being. Moments like this make me think of a great American tradition of holiday sales. Now, just because something is 10% off doesn't mean it won't get cheaper or eventually find its way to the $1 bin, but for a careful, deliberate, disciplined investor, quite a few stocks got a lot more interesting. Someone who read an early draft of this post said, "You mean it feels like the President's Day Sale?" (The biggest first-quarter retail shopping event each year in the US). I said, of course, you can call it that.
Conclusion: Strategic Patience in Volatile Markets
Jokes aside—I see lots of ideas to look at, and some to buy. In fact, that's how I spent every day since my travel, including the weekend, glued to my laptop doing what I love most: hunting for opportunities. Will prices get even better? I don't know, but we'll be ready to purchase them, and hopefully, I won't be stuck up in the air due to someone else's helicopter problems again. I keep my wish list always ready, and I prefer when the stocks come to me, instead of me chasing them.
Disclosure:
Blue Infinitas Capital, LLC is a registered investment adviser. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.