SO.....lets talk about collecting....in my case ART. Although to be clear....we do collect other categories.....antiques and a number of categories that we own a single or a couple of items that are the.......BEST of the BEST.....but only an item or two.....so not really a collection. We have made eight to ten art purchases this year....5-6 paintings and 3-4 pieces of sculpture. Our area is American Impressionistic paintings, Western paintings and sculpture, Early Texas paintings. These areas also lap over into Illustration Art at bit. What I am seeing in the regional and national auctions in our area of collecting emphasis is STILL a strong markets. BUT....it is ALL ABOUT QUALITY. That is the KEY to collecting.....QUALITY. We are not in this league of collecting....but this is a nice little article: The art market is in a correction as big spenders fade https://www.cnbc.com/2024/10/24/art-market-correction.html (BOLD is my opinion OR what I consider important content) "Key Points There are more likely sellers than buyers in the global art marke1, according to The Art Basel and UBS Survey of Global Collecting. The art market is going through a generational shift that’s created a mismatch between supply and demand. Dealers say the diverging paths of the various generations has led to an oversupply of seven- and eight-figure Impressionist and Abstract works. The global art market is poised for its second straight year of declines, as demand for the top trophy works wanes and a new generation of buyers favors lower-priced pieces, according to a new survey. Auction sales in the first six months at Christie’s, Sotheby’s, Phillips and Bonhams fell 26% from 2023 and 36% from the market peak in 2021, according to The Art Basel and UBS Survey of Global Collecting. The number of wealthy collectors surveyed who plan to purchase art in the next year fell to 43% from over half in 2023. At the same time, the number who plan to sell increased to 55% — meaning there are more likely sellers than buyers in the market. “For the biggest spenders, there has been a moderating in their spending or slowing of their pace,” said Paul Donovan, chief economist of UBS Global Wealth Management. “They’re taking a more considered approach.” As the art world prepares for the big auctions in New York in November and Art Basel Miami Beach in December, dealers, galleries and auctioneers are hoping for a post-election rebound. There are some bright spots. The vast majority (91%) of wealthy collectors were “optimistic” about the global art market’s performance over the next six months, up from 77% at the end of 2023, the survey said. That’s a larger share than were optimistic about the stock market, at 88%. Only 3% of high-net-worth collectors are pessimistic about the art market’s short-term future. The median spending on art by wealthy collectors remains stable at around $50,000 a year, according to the survey. Over three-quarters of wealthy collectors surveyed had purchased a painting in both 2023 and the first half of 2024. Yet a broad array of measures — from buyer interest to online sales — point to another year of declines or, at best, flat sales. Dealers and auction experts say geopolitical concerns (especially in the Middle East and Ukraine) along with economic weakness in Europe and China are draining buyer confidence. Higher interest rates also raised the opportunity cost of buying art, since wealthy collectors could earn an easy 5% or more from cash and Treasuries. Just as in the classic-car market, the art market is going through a generational shift that’s created a mismatch between supply and demand. Older collectors are downsizing their collection by selling off pricey but not masterpiece-level works. Younger collectors, mainly Gen Xers and millennials, are coming into the market to replace them, but they’re buying more affordable, more modern work from galleries and art shows. “2024 suggests that rather than creating a supply-driven boom in value as they may have done in other years, trends towards greater selling will likely primarily affect sales volumes, with collectors tending to sell from the bottom of their collections, deaccessioning more but lower-value works, and advisors reportedly focused on ‘streamlining client collections’ with the disposal of more unwanted or insignificant artworks rather than trying to capture price appreciation,” the UBS report said. Dealers say the diverging paths of the various generations has led to an oversupply of seven- and eight-figure Impressionist and Abstract works. According to the survey, the high end of the art market, or works priced at $10 million or more, was the strongest before 2022. Now, it’s the weakest. “Gen X, and to a lesser extent the younger generations, they’re not necessarily going to be going out and buying the most expensive artworks,” Donovan said. “They’re more engaged but they also have potentially more budget constraints. The people who have traditionally been buying the higher-price art are slowing their purchase of those artists.” Gen Xers, in fact, have quickly become the most important generation for collectibles. According to the UBS survey, Gen X respondents had the highest average spending in 2023 — at about $578,000 — and their lead continued in 2024, at more than a third higher than millennials and more than twice those of Boomers and Gen Z respondents. Overall, wealthy collectors are reducing their exposure to art. While art’s role as an “asset” is hotly debated, the report said the average allocation to art was 15% in 2024, down from 22% of their portfolios in 2021. Granted, some of the decline may be due to the increased value of stocks and other assets in their portfolios. Yet the drop suggests many collectors have paused their buying. The super-wealthy have the highest exposure to art. Those worth $50 million or more have an average of 25% of their assets in art, down from 29% last year. Millionaires worth less than $5 million have about 12%. Collectors who have been active in the market for decades have built up large collections, that will either have to be sold, passed on to family or bequeathed to museums or nonprofits. The average number of works owned by wealthy collectors worldwide is 44, according to the survey. Gen Z collectors have an average of 33 works, while collectors who have been buying for more than 20 years had an average of 110 works. When asked about their biggest concerns for the art market, the largest number (52%) cited “barriers to the free movement of art internationally.” The second largest concern was the “rise of legal issues in the art trade,” such as restitution cases, fakes and forgeries, as well as “ethical considerations concerning artists,” such as how they are compensated and promoted. “Art market fluctuations” ranked fourth. The Great Wealth transfer, which could see tens of trillions of dollars in wealth passed from older generations to younger generations, could also usher in a Great Art transfer. Fully 91% of wealthy collectors had works in their collections that were inherited or gifted through a will or other bequest, according to the survey. Despite the expectation that families will sell the works they inherit, 72% of those surveyed kept at least some of their inherited art. Those who do sell inherited art were more likely to cite a lack of display space or taxes as the reasons, rather than taste. “There has always been an assumption that as art moves down a generation, the younger generation has different tastes,” Donovan said. “But to assume that this leads to the wholesale breakup of the collections or selling is wrong. Art is something which stimulates the emotions and there may be an association with certain pieces of art with your parents.”" MY COMMENT Much of this article is talking about the ULTRA RICH and their art collecting. NOT.....where we fit into the process. BUT....at all levels......art and collectables go up and down. Just like any ASSET. I do obviously consider art and collectables an ASSET. BUT.....that does not mean it should be an....."investment". Although....if we liquidated our entire house full of personal property....we would be well ahead of our "cost" for what we own. On the other hand if that money had been invested for the long term in stocks or funds in the fashion that I invest....it would be worth significantly MORE. Just like stock investing there are similar concepts: 1. You have to educate yourself and do your due diligence and research. 2. You have to buy top QUALITY....the BEST you can afford. 3. You have to know the market and trends. 4. You have to buy for the long term to smooth out all the shorter term volatility and fads. 5. You have to ignore all the fads and fake, phony, made up collectables and art. You have to avoid fakes and fraud. There is a life long process of learning and educating yourself.
BUMMER.....house hunters. Mortgage rates climb north of 6.5% for first time since August https://finance.yahoo.com/news/mort...65-for-first-time-since-august-034858178.html
Good news....but pretty OBVIOUS. Of course this is just to year end 2024. Where we go after 2024 will significantly depend on the election results and the impact on TAXES..... GOVERNMENT REGULATION of business....SPENDING....etc, etc, etc. New data shows US economy on track to grow at 'encouragingly solid pace' https://finance.yahoo.com/news/new-...ow-at-encouragingly-solid-pace-162105757.html MY COMMENT Although as usual.....the stock market is NOT the economy.....and....vice versa. Of course the two do float around in the same general universe and once in a while....touch....each other.
A light day in the markets today. BUT....still a low/medium gain for me in my stocks. I also beat the SP500 today by 0.12%. Moving on to FRIDAY and the end of the market week. BOOM.
I like this little article. Unlocking Stock Market Success: Why You Should Embrace the Skew https://blogs.cfainstitute.org/inve...rket-success-why-you-should-embrace-the-skew/ (BOLD is my opinion OR what I consider important content) "When we talk about stock returns, most people assume that individual stocks should yield positive returns. That’s because the stock market has historically outperformed other asset classes like bonds. But surprisingly, the median monthly return for a large sample of individual stocks is — drumroll, please – zero. That’s right. A study conducted by Henric Bessembinder and published in the Financial Analysts Journal in April 2023 found that on a monthly basis, individual stocks generate returns centered around zero. In fact, this paints a “half-full, half-empty” scenario. Half the stocks produce positive returns, while the other half have negative returns. As an investor or advisor, how do you and your clients react to this? If this zero-median return statistic were the only way to look at stock performance, it would be hard to justify investing in stocks at all. Convincing clients to invest in equities would be an uphill battle, especially if they’re seeking short-term gains. Volatility In fact, there are many ways to evaluate stock returns beyond just focusing on median monthly performance. One common approach is to measure stock returns in terms of volatility. Volatility refers to how much a stock’s price fluctuates, and it’s often measured using standard deviation. On average, the annual standard deviation for stock returns is about 50%, which means that the price of an individual stock can swing wildly throughout the year. If we apply the 95% confidence interval often used in statistics, this implies that an individual stock’s return could vary by roughly +/- 100% in a given year. This is huge. Essentially, an individual stock could double or lose all its value within 12 months. This level of uncertainty can make stocks seem daunting, especially for those looking for stability. The idea that individual stocks are a “half-full, half-empty” proposition monthly, and are even more volatile annually, can scare away potential investors. But it’s important to remember that stocks are primarily intended to be long-term investments. The short-term ups and downs, while nerve-wracking, are part of the journey toward long-term wealth creation. So, what happens when we shift our focus to long-term individual stock returns? Shouldn’t we expect more consistency over time? Bessembinder also looked at long-term stock performance, and the findings weren’t exactly comforting. Over the long run, 55% of US stocks underperformed US Treasury Bill returns, meaning that more than half of individual stocks did worse than the safest government-backed investments. Perhaps even more alarming is the fact that the most common outcome for individual stocks was a 100% loss — complete failure. These findings suggest that investing in individual stocks is a high-risk endeavor, even when taking a long-term approach. Typically, when investors and financial analysts assess stock performance, they focus on two key statistical measures: central value (such as the mean or median return) and volatility (as measured by standard deviation). This traditional method of analysis often leads to a negative or at least discouraging narrative about investing in individual stocks. If returns are largely zero in the short term, highly volatile in the medium term, and risky in the long term, why would anyone invest in stocks? The answer, as history shows, is that despite these challenges, stocks have significantly outperformed other asset classes like bonds and cash over extended periods. But to truly understand why, we need to look beyond the typical first two parameters used in analyzing stock returns. The Third Parameter for Assessing Stock Performance: Positive Skew While traditional analysis focuses heavily on the first two parameters — central value and volatility — it misses a crucial component of stock returns: positive skew. Positive skew is the third parameter of stock return distribution, and it’s key to explaining why stocks have historically outperformed other investments. If we only focus on central value and volatility, we are essentially assuming that stock returns follow a normal distribution, similar to a bell curve. This assumption works well for many natural phenomena, but it doesn’t apply to stock returns. Why not? Because stock returns are not governed by natural laws; they are driven by the actions of human beings, who are often irrational and driven by emotions. Unlike natural events that follow predictable patterns, stock prices are the result of complex human behaviors — fear, greed, speculation, optimism, and panic. This emotional backdrop means that stock prices can shoot up dramatically when crowds get carried away but can only drop to a limit of -100% (when a stock loses all its value). This is what creates a positive skew in stock returns. In simple terms, while the downside for any stock is capped at a 100% loss, the upside is theoretically unlimited. An investor might lose all their money on one stock, but another stock could skyrocket, gaining 200%, 500%, or even more. It is this asymmetry in returns –the fact that the gains can far exceed the losses — that generates positive skew. This skew, combined with the magic of multi-period compounding, explains much of the long-term value of investing in stocks. Learn to Tolerate Tail Events If you examine stock return distributions, you’ll notice that the long-term value from investing in the market comes primarily from tail events. These are the rare but extreme outcomes that occur at both ends of the distribution. The long, positive tail is what produces the outsized returns that more than make up for the smaller, frequent losses. For stocks to have generated the high returns we’ve seen historically, the large positive tail events must have outweighed the large negative ones. The more positively skewed the return distribution, the higher the long-term returns. This might sound counterintuitive at first, especially when traditional portfolio management strategies focus on eliminating volatility. Portfolio construction discussions often center around how to smooth out the ride by reducing exposure to extreme events, both positive and negative. The goal is to create a more-predictable and less-volatile return stream, which can feel safer for investors. However, in avoiding those unnerving tail events, investors eliminate both the big losses and the big gains. This reduces positive skew and, as a result, dramatically reduces overall returns. The Hidden Cost of Managed Equity A typical “Managed Equity” strategy eliminates all stock losses (no returns less than zero) while capping upside returns. For example, a well-known investment company offers a managed S&P 500 fund that avoids all annual losses while limiting returns to less than 7%. Since it is virtually impossible to predict daily returns, this return feat is accomplished by simply holding a zero cost S&P 500 options collar. Over the last 40+ years, when the S&P 500 generated more than 11% annually, this strategy would have yielded a meager 4% annual return. In other words, avoiding emotional tail events means you miss out on the very returns that are the major drivers of long-term wealth creation. Investors who focus too much on smoothing returns end up with more consistent but dramatically lower returns over time. To truly benefit from stock investing, it’s necessary to embrace both the emotions and the rewards that come with positive skew. This means learning to live with tail events. They may be uncomfortable when they occur, but they are an integral part of long-term success in the stock market. The most successful investors recognize this and accept that volatility and tail events that are simply unavoidable are crucial for achieving high returns. By learning to appreciate positive skew and its associated tail events, investors can unlock the full potential of stock market gains. Learn to love, not fear the skew." MY COMMENT A different way to look at stocks and returns. BUT....probably true. In other words......no risk no return.....or....no guts, no glory. I believe there is another SIGNIFICANT factor....earnings and stock fundamentals. of course in the context of the discussion above these events are what generates or leads to....."tail events". In any event....yet again....more confirmation of LONG TERM INVESTING.
