For those of us in Texas, that was a delightful summer. If June was fun in the sun Barbie, July and August were heat-dome Oppenheimer. Thankfully, the electric grid held firm, and we can soon say 'buh-bye' to the griddle and ‘hello' to gridiron weather. With September’s cooler temperatures, malaise gives way to momentum as football season returns.
The sun comes up. People wake up … get up … and go about doing the things that they do best. This productivity, in turn, drives economic growth. Revenues and earnings go up. And over time, the momentum of these fundamental factors makes stock markets go up.
“Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.” – Will Rogers
In the short term, however, another kind of momentum often takes hold. Technical factors—liquidity, sentiment, and price action—can often override fundamentals. According to the General Theory of Reflexivity (here), buyers—humans and, yes … computers—buy stocks that are going up, and these same stocks go up because buyers are buying them. But the momentum of this virtuous cycle can quickly shift. In the short term, stock prices will go like this / unless they go like this ⸻ or this \ , and only Mr. Market knows which way. When playing The Money Game, long-term momentum is your preferred partner.
It’s a strange thing to have visited a place that, months later, no longer exists. Last October, on the way to visit my best friend from college days, I happened to pass through the historic town of Lahaina. While waiting for the ferry to Lanai, I enjoyed my first twenty-five dollar fish sandwich at Papa'aina on Wharf Street (here) and soaked up the Jimmy Buffett ambiance. Lahaina was a postcard picture—palm trees … calm seas … gentle breeze. Under blue skies, the harbor area bustled with tourists and laid-back locals. I especially remember the beautiful young woman I met during a Lyft ride to the harbor. Over the past few weeks, she has haunted my mind, and I wonder if she was one of the lucky ones. At the time, no one could have imagined that this tropical paradise would, within a year, be erased by the unexpected momentum of a terrible inferno. The Lahaina tragedy is a blunt reminder that, despite our best efforts, we are forever at the mercy of intangible elements—luck, always … and in this case, the wind. On that fateful day last month, both hit hard in the worst possible way.
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