What is different about the S&P 500’s longest losing streak in 8 years…

…Is that it’s a paper cut. Most days the market has barely declined at all. We don’t know what will happen. So far, not much.

To prevent becoming too concerned about day-to-day price volatility, check out this ultra-long stock market chart here.

Fascinating! Investing works. Stay the course…even if it gets a bit bumpy.

Will Food Stocks Become a Bargain?

Check out this report. I’m reading this as mild price deflation. Once the dust clears we’ll look for bargains in food production. I’m also expecting that at some point soon we should be able to invest in legal marijuana farming via a mutual fund. At the moment, the bargains aren’t there. Yet.

Getting our shovels ready.

Last week, we attended Charles Schwab & Co. Inc.’s IMPACT investment conference. My perception was that the “consensus” opinion by experts there was for very low returns to all generic investment classes for the next decade. We should keep in mind that the “consensus” is often wrong. Now I’m watching overwhelming news which indicates that whoever is elected President next week is likely to have a very tumultuous four year term, complete with possible violence and impeachment. If Wikileaks is correct, then our system of government is indeed corrupt. What this means for our investment plans for the next four years is impossible to decipher. My plan is prepare deeply and steer a middle course. It is entirely possible that we might find bargains in all this, and it is also quite possible, as is so often the case, that we will all muddle by, and in fact find diamonds in what seems to be a gigantic steaming manure pile of social unrest. With shovels in hand, on we go.

How to create wealth which lasts generations

One of my fascinations is how to pass on wealth between generations. It amazes me how people can succeed magnificently at wealth transfers, and can even prepare the following generations for wealth which they themselves never enjoyed. Or sometimes they can blow things to shreds. Life is a lot harder than we would like to realize, and providing for future generations in terms of education and actual wealth is a profound blessing. There’s a lot to learn from the European and Asian families who have managed this successfully for centuries. Read here what billionaires do.

Flash Crash in the British pound currency!

I’m guessing this is a good time to plan a visit to England. Today’s frenzy over the British pound is a good thing for British exporters too. It also illustrates why we tend to avoid ETF’s: too many technology-driven flash crashes.At some point soon I expect to go bargain hunting. Read more about why you should plan a trip to London here.

Why the economy isn’t thriving: more insight

Last week we were in San Francisco listening to a presentation by Schwab’s chief economist, Liz Ann Saunders. My takeaway was that the economy is not thriving because of

a. excessive debt in the system.
b. complexity.

The excessive debt may or may not have prevented a depression but its legacy is gargantuan payments to keep from defaulting. These will only become larger as interest rates rise.

The complexity is due to technological change and off-the-charts over-regulation. Distractions have grown and regulatory uncertainty is rife.

What will happen? We don’t know. Here’s bond guru Bill Gross’ latest comment.

It’s a Fed, Fed, Fed, Fed World

With apologies to the 1963 movie, “It’s a Mad Mad Mad Mad World” starring Spencer Tracy and Milton Berle, we are currently in the midst of something new: the Federal Reserve is in control of our stock markets. Their quantitative easing and low interest rates have not boosted the economy as much as intended, but they have certainly been wonderful for stocks, bonds, and real estate.

In today’s Wall Street Journal, page A-13, in the article “Trump Tees Up A Necessary Debate On The Fed”, economist Ruchir Sharma of the investment bank Morgan Stanley writes:

“Since the Fed began aggressive monetary easing in 2008, my calculations show that nearly 60% of stock market gains have come on those days, once every six weeks, that the Federal Open Market Committee announces its policy decisions.Put another way, the S&P 500 index has gained 699 points since January 2008, and 422 of those points came on the 70 Fed announcement days. The average gain on announcement days was 0.49%, or roughly 50 times higher than the average gain of 0.01% on other days.

This is a sign of dysfunction. The stock market should be a barometer of the economy, but in practice it has become a barometer of Fed policy.”

Yep, you weren’t just imagining it. How this all unwinds is unknown. Meanwhile, we should be very cautious, and enjoy the gains. This will probably end nicely. Perhaps not.

The debate doesn’t matter.

Whoever is elected president is likely to be a weak leader, beset on all sides by extremely unhappy factions. The debate tonight is likely to feature bluster and storming. Meanwhile we’re on Fantasy Island when it comes to economic issues.

Read more here.