The Long Term Investor

Over the last 3-4 weeks nothing much in the markets has been about reality. ALL the fear-mongering and DOOM&GLOOM is mostly based on nothing but headlines and media negativity.....and a nasty SKEPTICISM......that seems to underlie and dominate the markets.

In a REAL WORLD environment the news and actual results we have been seeing over that time would be considered very positive. I would say that at least 80-90% of all the economic news we have seen over the past month is very positive.

The news today is no different......another positive economic report is the key item in the market news today. It totally fly's in the face of all the recent negativity and headlines and articles.

BUT when it comes to the modern markets and the HUGE impact of the 24/7 media....reality does not matter. It is all.....form over substance. BUT......reality or not the day to day negative story-line is very dangerous and has legs. Anyway.....here is the story of the day today.

PPI shows wholesale inflation increased less than expected in December

https://finance.yahoo.com/news/ppi-...less-than-expected-in-december-133720234.html

(BOLD is my opinion OR what I consider important content)

"Wholesale prices rose less than expected in December, a positive sign for the economy amid recent market fears that inflation isn't falling as quickly as hoped to the Federal Reserve's 2% target.

Tuesday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3.3%% from the year prior, up from the 3% seen in November but below the 3.5% increase economists had projected. On a monthly basis, prices increased 0.2%, below the 0.4% increase economists had expected.

Excluding food and energy, "core" prices rose 3.5% year-over-year, above November's 3.4% gain. Economists had expected an increase of 3.8%. Meanwhile, month-over-month core prices were unchanged, below the 0.3% increase economists had expected and the 0.2% gain seen last month.

Capital Economics North America economist Thomas Ryan noted the release "seems encouraging" but it also "masks some price jumps in a few of the key components which feed directly into the Fed’s preferred core PCE inflation gauge." Notably, domestic and international airfare prices — which feed into the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index — jumped in December.

Morgan Stanley's economics team moved up their core PCE inflation forecast for December following the release. The firm now believes prices increased 0.23% month-over-month in December, up from the 0.21% they projected prior to the release.

Thursday's PPI reading comes one day ahead of a highly anticipated release of the December Consumer Price Index (CPI). Economists expect that print to show little progress, with core inflation anticipated to come in at 3.3% on an annual basis for the fifth straight month. More-detailed forecasts on PCE will be updated following the CPI release on Wednesday.

Nationwide senior economist Ben Ayers argued that Tuesday's softer-than-expected PPI should temper the "higher end of expectations for tomorrow's CPI report."

A recent hot labor report has economists largely believing signs of cooling inflation in the coming months will be required for the Fed to cut interest rates further this year.

As of Tuesday morning, markets were pricing in just a 3% chance the Fed cuts rates at its January meeting, per the CME FedWatch Tool. Markets don't see a more than 50% chance the Fed cuts rates at a meeting until at least June.

MY COMMENT

As usual......never-mind. We will just move on to something else to fear-monger and freak out the markets.

 

This is a nice historical account of the stock and bond markets here in the USA.....from before the Civil War to now.

A Guide for Investment Analysts: The Prehistory of the US Markets

https://blogs.cfainstitute.org/inve...nt-analysts-the-prehistory-of-the-us-markets/

 

At this early point in the day I have a single RED stock....COST. Although NVDA is trying to go red.......and......just did.

 

As to NVDA......it continues to be treated like some also-ran stock by the markets. Talk about total disrespect.

Here is the next HUGE event for NVDA this Thursday:

TSMC fourth-quarter profit seen jumping 58% amid strong AI chip demand

https://finance.yahoo.com/news/tsmc-fourth-quarter-profit-seen-051539944.html

 

the markets freaked out the other day partly due to a consumer confidence survey. You will not see much of anything about this survey.....even though in real world terms it is much more important.

Small business optimism jumps to 6-year high following Trump win
NFIB says small business owners are 'more certain and hopeful' of the incoming Trump administration's economic agenda

https://www.foxbusiness.com/small-b...ptimism-jumps-6-year-high-following-trump-win


""The National Federation of Independent Business' (NFIB) latest Small Business Optimism Index jumped 3.4 points to 105.1 in December, the highest reading since October 2018.

This is the second consecutive reading above the 50-year average, after the November index broke a 2.5-year streak that same month as Trump's win.

"Optimism on Main Street continues to grow with the improved economic outlook following the election," said NFIB Chief Economist Bill Dunkelberg. "Small business owners feel more certain and hopeful about the economic agenda of the new administration.""

.........

"Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year."

..........

"The percent of small business owners believing it is a good time to expand their business also climbed, rising six points to a seasonally-adjusted 20%, which is the highest reading since February 2020."

MY COMMENT

This survey contrary to the "consumer survey" is based on REAL world business owners thoughts. In other words people who are on the front lines of the economy.

Small business is still the guts of the USA economy and job creation. Of course in typical fashion....this survey will mostly be IGNORED in the media.

YES......more good economic news for the economy and investors......"if".....big "If".......we can ignore all the economic opinion BS that dominates the headlines.

 

I see a theme in the posts above.

It is basically the prime function of long term investors to sit and do nothing and have the GUTS to simply IGNORE all the overwhelming BS that inundates the day to day markets.

This is a very difficult task for many people as the.....NOISE........ is constant and overwhelming. It is very easy to give in to....and....get swept along by the DARK SIDE of the day to day markets and those that legally and illegally manipulate them for short term profit and their personal agenda.

 

Today.....yes, another day where basically not much is going on....if you ignore all the DRAMA. The markets seem to be weakening......so we will see if they can resist FADING into the day.

NVDA has now gone strongly negative for the day....especially considering the news and market events today.

I do not underestimate the ability of the markets to flip red today in the face of more good news. The speculators and traders and bond vigilantes are controlling the markets lately.....not a pretty sight.

 

Way to go Husker.

The markets have lost it today....especially the big tech side of things. We were told that the PPI eas going to be......all important today. I guess not..... since it came in lower than expected which was supposed to be good for the markets.

At this point the short term market direction is simply negative.....in spite of the fact that we are in the middle of a bull market. People, traders, whoever.....are just determined to drive stocks lower and if it continues we are going to end up in a multi-month correction.

AND....it is right on cue. Every time it is earnings the market narrative goes negative and washes out some really great earnings.

 

SO....ignoring the day....I like this little article.

Compounding: Why saving, investing for retirement early is a powerful tool
Spoiler: It's math.

https://www.usatoday.com/story/mone...ounding-helps-retirement-savings/77468386007/

(BOLD is my opinion OR what I consider important content)

"Unless you're independently wealthy, you should be saving and investing for retirement ‒ starting, ideally, in your 20s or 30s. Sure, if you're 47 and haven't really started yet, start now. But those who start early have the most to gain, and they don't even need to be socking away huge sums every year.

The retirement savings hack that has made the biggest impression on me is (drum roll...) compounding. Here's a look at how powerful compounding can be when you're trying to build wealth.

What is compounding?

You'll often see compounding referred to in relation to interest. So here's how that works: Imagine you have $1,000 in the bank and you're earning 5% interest on it. In the first year, you'll get $50, which is 5% of $1,000. That $50 is added to your $1,000, becoming $1,050. In year two, you'll get 5% of that $1,050 instead of 5% of $1,000 -- so $52.50 is added to your account, for a total of $1,102.50. Year three, and 5% of $1,102.50 is $55.13.

That growth is compounding.

When you invest in stocks, you can also benefit from compounded growth. Consider that the overall stock market has averaged annual gains of close to 10% over many decades. If you invest in a simple broad-market index fund, such as one that tracks the S&P 500, you might enjoy an average annual return of 8%, 10%, 12%, or some other rate. Here's how your money might grow over time at 8%: through the phenomenon of compounded growth.

(SEE CHART IN ARTICLE)

You need three things for that:

Time

The table above shows hefty sums being amassed, but the heftiest sums are at the bottom of the table -- because compounding is most powerful when it has a lot of time in which to work. You money in the examples above grows by tens of thousands of dollars annually in the early years and then by hundreds of thousands of dollars and even millions later on. This is why it's so powerful to start saving and investing early.

Money

The table above has two columns, and you can clearly see how much more you might amass if you're socking away big sums each year. So try to sock away big sums each year. And don't put off doing so, because your earliest invested dollars are your most powerful ones, as they have the most time in which to grow.

Growth rate

Finally, your money should be growing at a good clip. Adding money to your mattress won't result in much growth over time. It's hard to beat the stock market for long-term wealth-building, but the stock market offers no guaranteed growth rates. Over long periods, it has always gone up, though, usually while outperforming bonds and other alternatives.

Investing in stocks

Here are some solid low-fee index funds to consider:

Data source: Morningstar.com, as of Dec. 27, 2024, and Vanguard.com. *Since inception, Sept. 7, 2010.

Here's a bit about each:

• Vanguard S&P 500 ETF: S&P 500 index funds are focused on 500 of the biggest companies in America, which together make up around 80% of the entire U.S. market.
• Vanguard Total Stock Market ETF: This ETF aims to include all U.S. stocks, including small and medium-sized ones.
• Vanguard Total World Stock ETF: This ETF encompasses just about all the stocks in the world.

can be all you need to build a secure financial future for yourself.

If you want to aim for faster growth, you might park some of your money in more aggressive ETFs -- or in some individual growth stocks. To do so, it's best to read up more on investing, so that you understand any risk-return trade-offs you're making.

And remember that you don't need fast-growing stocks and funds if you have enough time. If you're socking away many thousands of dollars a year and you have plenty of years ahead of you, you can grow quite rich without taking on that much risk. Remain diligent, and an 8% or 10% growth rate can build your wealth quite effectively -- through compounding."

MY COMMENT

A simple little article for newer investors.....but....for ALL of us this is the key to long term investing. this is why much of the short term "stuff" does not matter.

 

A smaller loss for me today....with.......(GASP)....three stocks in the green....CMG, HD and PLTR.

But I still lost out to the SP500 today by 0.67%.

At least it was not a continuation of the BIG losses.

ONWARD AND UPWARD......IGNORE.

 

AND.....after all the media and "expert" fear-mongering and DOOM&GLOOM....reality intrudes on the STUPIDITY.

Core CPI rises less than forecast as inflation pressures ease slightly in December

https://finance.yahoo.com/news/core...ures-ease-slightly-in-december-140609346.html

(BOLD is my opinion OR what I consider important content)

"New data from the Bureau of Labor Statistics out Wednesday showed that a key inflation metric eased for the first time since July.

On a "core" basis, which strips out the more volatile costs of food and gas, the December Consumer Price Index (CPI) climbed 0.2% over the prior month, a deceleration from November's 0.3% monthly gain. On an annual basis, prices rose 3.2%.

Prior to December's print, core CPI had been stuck at a 3.3% annual gain for the past four months. It was the first time since July that year-over-year core CPI saw a deceleration in price growth.

The print is the latest economic data that the Federal Reserve will consider before its next interest rate decision later this month. Stocks rallied in the wake of the report with the 10-year treasury yield (^TNX) falling 12 basis points to trade below 4.7%.

"Markets reacted positively this morning for a good reason: the Federal Reserve is ok with watching the headline CPI go up temporarily if that increase does not spill over into the core CPI, and this is what happened in December."

Headline consumer prices rose as forecast last month. The CPI increased 2.9% over the prior year in December, an uptick from November's 2.7% annual gain in prices. The yearly increase matched economist expectations.

The index rose 0.4% over the previous month, ahead of the 0.3% increase seen in November and also on par with economists' estimates.

Seasonal factors like higher fuel costs and continued stickiness in food inflation kept the headline figures elevated.

Core inflation has remained stubbornly elevated due to higher costs for shelter and services like insurance and medical care. Used car prices also saw another strong uptick for the third consecutive month, rising 1.2% in December after a 2% monthly gain in November.

Although inflation has been slowing, it has remained above the Federal Reserve's 2% target on an annual basis.

"It hasn't been steady on inflation," Claudia Sahm, chief economist at New Century Advisors and former Federal Reserve economist, told Yahoo Finance's Morning Brief program. "It's been quite uneven but it is good to see some progress in the right direction. And I think that that's the big piece of this. We've been in a very 'wait and see' on the inflation front. And that's very much where the Fed is lined up."

"It is a bit of a breather to get some 'not not' bad news this morning," she continued. "But it's really not a game changer. It's a lot more of what we've seen with the month-to-month volatility mixed in."

The election of Donald Trump as the nation's next president has further complicated the outlook, with some economists arguing the US could face another inflation resurgence if Trump follows through with his key campaign promises. The president-elect will be sworn into office next week.

Trump's proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and curbs on immigration, are seen as inflationary. And those policies could further complicate the central bank's path forward for interest rates.

Shelter moderates, gas prices sticky

Notable callouts from the inflation print include the shelter index, which rose 4.6% on an unadjusted, annual basis, slightly lower than November's 4.7% uptick and the smallest 12-month increase since January 2022. The index rose 0.3% over the prior month, matching November.

Sticky shelter inflation has largely been blamed for higher core inflation readings over the past few months, according to economists.

The index for rent and owners' equivalent rent (OER) each rose 0.3% from November to December, a slight acceleration from the prior month's 0.2% increase for both categories. Owners' equivalent rent is the hypothetical rent a homeowner would pay for the same property.


The lodging away from home index fell 1% percent in December after rising 3.2% in November.

Meanwhile, the energy index rose 2.6% month over month after rising just 0.2% in November. On a yearly basis, the energy index was down 0.5% after a 3.2% decline the previous month.

Within energy, gas prices surged, rising 4.4% in December after a modest 0.6% uptick the previous month.

The food index increased 2.5% in December over the last year, with food prices rising 0.3% month over month — proving to be a sticky category for inflation. The indexes for food at home and food away from home each increased 0.3% in December.

Notably, on an annual basis, groceries are up the most since Oct. 2023. Egg prices continued to be a standout, increasing another 3.2% month over month after rising 8.2% in November. The price of eggs has risen 37% over the last year.

Other indexes with notable increases over the last year include motor vehicle insurance (+11.3%), medical care (+2.8%), education (+4%), and recreation (+1.1%)."

MY COMMENT

As we see new government policies on oil and regulation and the coming tax bill is passed.....this stuff will slowly fade into the background.

But....regardless we have an out of control financial media that appears to have no clue what is really going on....or worse....dont care.

Wrong again.....as is usual......much more than probability can explain.

 

Interesting article.....but.....those complaining in my view are more of a problem to the markets and investors. They are simply.....the pot calling the kettle black.

Is There a Problem with Passive Investing?

https://ofdollarsanddata.com/is-there-a-problem-with-passive-investing/

(BOLD is my opinion OR what I consider important content)

"Passive investing has absolutely revolutionized the investment landscape for individual investors. Not only has it dramatically lowered the costs of asset ownership, but it has done so while delivering strong returns. What began as a radical idea to buy the overall market without worrying about picking the winners now accounts for 57% of all equity fund assets and over $13 trillion.

However, with the rapid rise in passive ownership, some investors have begun to sound the alarm. The most recent warning came from Chamath Palihapitiya who stated that retail passive investors would be in for “a rude awakening if this isn’t addressed.” Putting aside the irony of Chamath “caring” about individual investors (after taking advantage of them to the tune of $750 million through his failed SPACs), his critique deserves a fair response.

Palihapitiya is part of a growing group of professional investors calling out the risks of passive investing. And, among them, no one is more vocal than Michael Green. Green, a former hedge fund manager and current Portfolio Manager and Chief Strategisat Simplify, believes that there is a passive bubble waiting to pop. If you want to understand Green’s views in more detail, I recommend reading this great profile on him.

While I won’t go through all of Green’s arguments, the biggest critiques of passive investing essentially boil down to:

1. Price Distortion: Passive investing distorts pricing in the market place, causing a momentum effect that makes the biggest stocks even bigger.
2. Market Instability: Passive investing leads to more market instability.
3. Corporate Governance Issues: Passive investing leads to increased market concentration among fund companies, leading to corporate governance concerns.

I will address each of these points in turn so that we can answer the question: Is there a problem with passive investing?

Problem 1: Price Distortion (Positive Feedback Loops)

The first, and arguably, biggest problem with passive investing is that passive funds purchase shares in companies based on the company’s index weight rather than its fundamentals. As a result, this distorts price discovery and causes the biggest companies (which have a higher weight in the passive indices) to get even bigger with time.

In other words, the relentless bid of 401(k) money going into passive funds every paycheck created the Magnificent 7, not the performance of the underlying companies.

Formally, this is known as a positive feedback loop, which I like to think of as the ancient symbol ouroboros (a snake eating its tail):

Visually, it’s the perfect metaphor for how such feedback loops work.

When it comes to passive investing, the positive feedback loop would go something like this:

• A fund buys a stock
• The stock price goes up
• The higher price leads to better returns for the stock/fund
• The improved returns draws in more investors
• More money flows into the fund
• The cycle repeats

There is a great paper called Ponzi Funds that analyzed how these feedback loops work in practice:

Flow-driven trading in these securities causes price pressure, which pushes up the funds’ existing positions resulting in realized returns. We decompose fund returns into a price pressure (self-inflated) and a fundamental component and show that when allocating capital across funds, investors are unable to identify whether realized returns are self-inflated or fundamental.

Mechanically, the argument makes sense. As more money comes into passive funds to buy stocks, active managers won’t be able to compete with these passive investors to accurately price these stocks. As Michael Green said:

Active managers can’t have enough scale to even stand in front of it, right? It’s like leaning against the steamroller and trying to stop it.

I don’t disagree with this argument, but I’m not sure we are there yet. Though passive investors currently own over 50% of all fund assets, I haven’t seen any evidence that passive ownership by itself has led to higher prices.

After all, if passive ownership led to higher stock prices, then the most passively held stocks should also be the most overvalued, right? But that’s not what we see in the data.

As Eric Balchunas, Senior ETF analyst at Bloomberg, pointed out in September 2024, stocks with higher passive ownership (higher decile) aren’t any more expensive than those with less passive ownership (lower decile):




If we don’t see this impacting valuations, then where are we supposed to see it?

This suggests to me that the issue of positive feedback loops is one of liquidity, and not necessarily passive ownership. As long as there is enough liquidity to set prices, then the impact of passive holding should be relatively minimal. This is exactly what the authors of the Ponzi Funds paper suggested as well:

We provide a simple regulatory reporting measure — fund illiquidity — which captures a fund’s potential for self-inflated returns.

Therefore, more stock liquidity lowers the probability of self-inflated returns (aka the positive feedback loop).

While I agree that passive investing is likely distorting prices somewhere in the market, I doubt this is the case for the Magnificent 7 or the S&P 500 overall. So when Michael Green says that, “It’s not that people are really that blown away by Nvidia. It’s just that half the market doesn’t actually care and won’t sell you shares,” I have to disagree.

Nvidia is a huge, highly liquid stock. While today the indiscriminate buying of passive investors could be keeping its price somewhat elevated, that doesn’t explain how it got to be the 2nd most valuable company in the world. Nvidia didn’t go from $350 billion to $3.5 trillion in two years because of passive investors. Active investors bid up its price as it repeatedly beat earnings forecasts (h/t Michael Batnick):





I am happy to take the L and say that passive investors boost valuations on the margins or in highly illiquid stocks, but to say that the biggest stocks are only big because of passive investing seems very off. While passive investors may one day cause such price distortions for the largest stocks, I don’t see any significant evidence of that today.

But, even if passive investors aren’t necessarily making the biggest companies bigger, they may be making the market less stable overall. Let’s turn to that now.

Problem 2: Market Instability

Another big critique of passive investing is that it creates more market instability. Since passive funds have to buy based on fund flows rather than fundamentals, their behavior could amplify price movements in either direction. For example, during periods of market volatility, if many investors tried to exit their passive funds at once, it could lead to a cascading, negative feedback loop of selling.

This was the basic argument put forth by Michael Burry when he compared index funds to subprime CDOs. Burry used the analogy of a crowded theater with only one exit door. As he stated, “The theater keeps getting more crowded, but the exit door is the same as it always was.”

While I can see why Burry’s argument is correct in theory, it doesn’t seem to hold in practice. If we look at the 2020 How America Invests study by Vanguard, we can see that most passive investors don’t rush for the exit door even when things look the bleakest.

As illustrated in the figure below, only 10% of all Vanguard assets were traded during the first half of 2020 (at the start of the COVID-19 pandemic), compared to 8% in 2019:





Despite one of the most volatile times in market history, most passive investors didn’t do much.

In fact, only 15% of all Vanguard investors made any significant change to their portfolio (where significant is defined as a 10%+ change in their equity position) during this time. You can see this in the table below showing the percentage of investors that increased or decreased their equity allocation by more than 10% during the first half of 2020:




The funniest thing about this table (and against Burry’s argument) is that a subset of investors actually increased their equity allocations as the stock market went into free fall. So while some money was rushing out of the exit door, other money was rushing in.

This data suggests that the fear of a passive-induced negative feedback loop is overblown. Of course, if every passive investor were to exit their funds at once, it would cause a massive meltdown in prices as Burry argues. But, this is true of any asset class. If any group of investors were to start selling an asset class en masse, its price would drop dramatically. Passive vehicles aren’t the issue here.

Negative feedback loops have existed in markets long before passive index funds were invented. Therefore, if this risk ever materializes, I don’t think passive funds will be to blame.

In Burry’s defense though, there is some academic evidence that the rise of passive investing has led to increased market volatility. One study found that, “the rapid growth of passive funds has made stock demand 11% more inelastic, significantly affecting price elasticity in the U.S. stock market.” In other words, passive investing decreased the market’s ability to set prices, making it less efficient.

Some research from the Fed supports this as well. However, that same research found that other kinds of financial risks (such as liquidity transformation and redemption risk from funds) were lower with increased passive investing. So, passive’s overall impact on market stability may not be as clear cut as we originally thought.

While the systemic risks to passive investors during volatile times is likely exaggerated (as the Vanguard data illustrated), increasing passive ownership will likely increase future market volatility. I have no doubt that markets will get less efficient as passive takes more and more share from active. However, this should provide more opportunities for active managers to outperform in the long run. Unfortunately for them, I have seen no evidence of this so far.

Problem 3: Corporate Governance Issues

Lastly, opponents of passive investing have suggested that concentrated ownership of U.S. stocks (via passive funds) have created corporate governance issues. They argue that since these large fundholders vote on behalf of their owners (i.e. individual investors), they end up having an excessive level of control over corporate America. I briefly discussed this when talking about the Vanguard/BlackRock/State Street conspiracy and believe the argument has some merit.

Of all the issues with passive investing, concentrated voting power seems to be the most legitimate. It is true that these firms have an outsized influence on how corporations govern themselves. So, if they want to push climate change or a DEI agenda, they can. It would be hard for any individual investor or any small group of investors to counteract this.

However, in defense of Vanguard, BlackRock, and State Street, I don’t believe most fund owners (aka individual investors) care enough about corporate governance issues to vote on them themselves. As I noted in my previous discussion on the issue, Vanguard voted on over 30,000 management proposals in 2023. Expecting individual investors to spend time on this many proxy votes is neither efficient nor feasible at scale.

While concentrated voting power in America’s largest companies can definitely be an issue, I believe some are trying to do the right thing to solve it. Vanguard, in particular, announced in late 2023 that they were launching an opt-in proxy voting program for some of their funds. And the initial results from the program were promising with over 40,000 Vanguard investors voting their proxies in 2024.

While this doesn’t fully solve the concentrated voting power problem, I believe it’s a strong step in the right direction. We will have to wait and see how this evolves in the coming years.

The Bottom Line (No Good Solutions)

If I had to pass judgement on the most common risks associated with passive investing, here’s what I would say:

1. Price Distortion: Not yet, but one day.
2. Market Instability: Somewhat.
3. Corporate Governance Issues: True, but improving.

Overall, passive investing seems to have caused some minor distortions in markets. However, the bigger problems still seem years away. It’s like what the Michael Green profile said about the super volcano under Yellowstone. We all know it’s a problem, but there’s not much we can do about it for now.

This is the biggest issue I have with critics of passive investing—they don’t have any good solutions to the passive problem. They complain about how market prices are being distorted by passive investors, yet don’t have any way for retail investors to overcome this.

Oh, should I become an active manager? Should I ignore equities altogether? How about I do index rebalancing arbitrage to buy the stocks that are going to get added to an index before they get added?

None of these are realistic options for the vast majority of individual investors. But don’t just take my word for it. Cliff Asness recently went on The Compound and Friends and had an in-depth discussion about this very issue. Cliff’s view is that markets have gotten slightly less efficient and indexing may be somewhat to blame, but the true explanation is likely multi-dimensional (i.e. there are multiple factors at play).

This is probably the answer that’s most likely to be true. Unfortunately, most people don’t want to hear an answer that boils down to—it’s complicated.

Lastly, I have nothing against the anti-passive crowd. They are an important intellectual voice in this debate and I’ve learned a lot from them. However, based on the evidence, I think we won’t see any of their dire predictions come true anytime soon."

MY COMMENT

These critics are just jealous and dont like the passive vehicles impinging on their territory.

if they want to see whose behavior creates volatility and distorts the markets and tries to control corporate governance......Just look in the mirror.

 

The markets are up nicely today based on the REAL CPI data.....not the fantasy BS. BUT.....I still get the feeling that the markets are moving up while holding their nose. I see it as a "reluctant rally".

I believe this rally is totally justified and that the recent negativity is not.....but....I am not sure the general markets see it that way....even with this little rally.

So lets see if it holds for the entire day.

 

As i scan articles and headlines....it is FUNNY to see all the pre-CPI release negative headlines and articles. How embarrassing.

 

At the same time we are seeing HUGE earnings beats with some of the big banks today....Citi....Goldman....JP Morgan....Wells Fargo.....etc.

Bank earnings dont mean much except for the banks. BUT....a good start to earnings today. BUT....it is generally overshadowed by the CPI news......which is not actually news at all.

The next FEAR topic we will no doubt see over the next week or so is.....the FED meeting in a couple of weeks.