It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
It’s a little past midnight. I’m writing this edition from Gate 21, Terminal B, at Phoenix Sky Harbor Airport. Unfortunately for me, I’m stuck here — forced to spend the night after a missed connection.
I certainly won’t be sleeping much, and I have a deadline — so why not take advantage of the free time? That being said, this is going to be an abbreviated edition because, quite frankly, I’m pretty darn tired. So please excuse any typos; it’s been a long day.
And with that, let’s get right to it …
“Anyone with a pension or retirement fund is an investor in the stock market.“
— Brad Katsuyama
“The difference between playing the stock market and the horses is that one of the horses must win.
— Joey Adams
Credits and Debits
Credit: The biggest interest rate jump in bond markets since March has bullish traders questioning the staying power of the second-longest equity advance ever. Sniff, sniff. Hey … Is that the scent of fear in the air?
Debit: Until last week, the acceleration in the S&P 500 had been on an upward parabolic trajectory — which sounds great, until you realize that a parabolic trajectory has two components: up and down.
Credit: As Graham Summers notes, the stock market’s parabolic trajectory was a direct result of the Fed’s extremely loose financial policies. Stocks waited to begin their plunge only after US Treasury bonds began to collapse, pushing yields higher.
Debit: Then on Monday, the stock market got a very small taste of reality when the 410-day record streak without a 5% correction finally ended, as the S&P 500 lost 4.1%, the Nasdaq dropped 3.8%, and the Dow plunged 1177 points for a one day loss of 4.6%. Huh. Apparently, it’s not an old wives’ tale — markets actually do go down.
Credit: The following day, Carl Icahn issued an ominous warning when he said, “This is a manifestation of a real deep problem we have in our markets. The market will bounce back but these are the rumblings before the earthquake.”
Debit: Then again, try telling that to the trader who lost $4 million on Monday — cash that he had accumulated in just three short years of trading after starting with a $50,000 bankroll. Ouch.
Credit: The “good” news was that the markets reversed course on Tuesday — the Dow scratched back about a third of its losses from the day before — but then they wobbled on Wednesday, finishing the day essentially unchanged. On Thursday, however, the market lurched downward again, as the Dow plunged more than 1000 points for the second time in four days.
Credit: Then came Friday — the Dow ended the final session of the week up more than 300 points, ending the most turbulent week on Wall St. in a long time, and leaving stocks with their steepest weekly slide in two years. Clearly, volatility is back. Unfortunately, the early trend appears to be one of lower highs and lower lows — which suggests that, after 9 years, a new bear market may be finally coming out of hibernation.
Debit: I know what you’re thinking: Okay, Len … So our stocks may be tanking but at least we still have Social Security and our pensions. If you say so, folks.
Debit: Frankly, if you think your Social Security and government pensions are set in stone because they are “guaranteed” by the government — or via Constitutional law — think again. As Simon Black points out, “The First Circuit Court affirmed last week without a doubt that government promises aren’t worth the paper they’re printed on.” Imagine that.
The Question of the Week
[poll id=”201″]
Last Week’s Poll Result
How many residences have you had during your lifetime?
- 6 to 10 (38%)
- 2 to 5 (31%)
- 11 to 15 (18%)
- More than 15 (13%)
- 1 (1%)
More than 1300 people responded to last week’s question and it turns out that almost 7 in 10 Len Penzo dot Com readers have lived at least six different addresses. As a point of comparison, the average person in the United States moves to a new residence 11.4 times during their lifetime.
By the Numbers
In honor of my carry-on luggage (that will soon be doubling as a pillow), here’s a quick grab bag of random trivia:
118 The number of ridges around the edge of a dime.
32 Muscles cats have in each ear.
24 Hours in the entire lifespan of a dragonfly.
50 The number of states that are listed across the top of the Lincoln Memorial on the back of a $5 bill.
0 The number of animal domesticated during the last 4000 years.
1 The number of English words that end in “mt”. Do you know the answer?
Useless News: The Value of a Good Vocabulary
I called one of my engineering buddies the other day and asked what he was doing.
He replied that he was working on an “Aqua-thermal treatment of ceramics, aluminum and steel under a constrained environment.”
I was duly impressed.
However, upon further inquiry, I learned that he was washing dishes with hot water under his wife’s supervision.
(h/t: billhilly)
Other Useless News
Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. Maine (3.64 pages/visit) (!)
2. Minnesota (2.48)
3. Nevada (2.38)
4. South Dakota (2.34)
5. Rhode Island (2.25)
46. Ohio (1.46)
47. Alabama (1.41)
48. Montana (1.40)
49. Virginia (1.36)
50. Missouri (1.31)
Whether you happen to enjoy what you’re reading (like my friends in Maine …) — or not (ahem, Missouri …) — please don’t forget to:
1. Click on that Like button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!
2. Make sure you follow me on Twitter!
3. Subscribe via email too!
And last, but not least …
4. Consider becoming a Len Penzo dot Com Insider! Thank you.
Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com
I recently received the following request from Tanya:
“Hi, Len. My husband and I were just wondering if you do personal loans. If you do, would you consider lending us $34,000 that we can pay back at $567 a month for five years?”
Um … no.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Dontafoolauself…….them Wall Street wizards will get out of the market before you do !!!
You better believe it! The retail mom-and-pop investor is always the last one in before they pull the rug out.
“…try telling that to the trader who lost $4 million on Monday cash that he had accumulated in just three short years of trading after starting with a $50,000 bankroll. ”
Well, the good news for him is he can deduct the federal maximum of $3,000/yr in loss from his 1040 for the next 1333 years. Yeah….ask me how I know…ahahahaaa
Hey, Andy: Maybe that poor guy can use whatever he has left in his account to pay one of those cryogenic companies to preserve his head so he can take advantage of that!
If there was ever a head that should be preserved, it’s Andy’s …
LOL!
I’m sorry you had to spend the night in an airport terminal. That sounds awful! You’ve got the weekend to relax and recover!
Sara
Thank you, Sara. I am trying to do that now. Airport terminals after midnight are surprisingly peaceful places. The trouble is, most of them don’t have a lot of places where one can stretch out and catch a decent nap.
Len, when I used to fly up to my cabin in Alaska, there was an overnight wait between the flight into Juneau , and the Ferry out to Haines.
I slept on the floor behind the stuffed bear in the “Welcome to Alkaska!” display in the terminal.
One thing about Alaska: There’s lots of room everywhere
One of my coworkers grew up in Haines. His folks still live there and he visits every year. I’ll have to ask him about the bear.
Len, The stuffed bear is (or was) in the airport terminal in Juneau. That was over ten years ago, but the nice thing about stuffed bears is they last longer than live ones and they don’t bite.
Len, I love these weekly roundups. You said Monday ended the stock market streak of 410 without a 5% correction, but the final day losses you show are all under 5%. Did you round up?
The 5% loss was an intraday correction. The Dow was down about 6% mid-session.
And this will all be blamed on Trump when the real meltdown begins. The market was a bubble when he was running for President. It got even bigger after he was elected. But he couldn’t help himself and took the bait claiming credit for the market’s continuing climb to the sun. Revision to the mean is a bitch and Trump now owns the market all the way to the bottom. His advisors should be fired.
Reversion to the mean is is going to be painful for a lot of folks — but it is also going to make the wallets of more than a few folks fatter too.’
Len, I think you’re crazy for not loaning Tanya $34,000. If my math is correct, she was willing to pay you $20 interest in exchange for tying up your money for 5 years. Not to mention the risk of her defaulting on the loan. What’s not to love?
I know, right? Maybe Tanya works for the Fed.
“dreamt” (to answer your By the Numbers question!)
Winner winner chicken dinner!
I was out feeding the chickens.
Did something happen? Where, the stock market?
Nothing you need to worry about, Dave!
Len,
Talking to some coworkers about getting into precious metals last week after the 2nd drop of over 1000 points, they said were not worried they tell us to just hold on and it always comes back up better then before. I thought to myself this time is going to be different, because this time the Dollar dies! Shame to think about the lies people are led to believe. Im not falling for the BS anymore, Im into Constitutional money now!
The door has opened to the new paradigm!
Jared
I agree, Jared. As I mentioned last week, the dollar-based financial system’s death rattle will appear when bonds stop acting as a safe haven and their prices end up falling sharply at the same time stocks are plunging.
At that point, however, it may be too late to get in to the ultimate safe haven assets: gold and silver.
A truly historic moment is coming. The only question is: How long before it gets here? Could be soon … then again, it may take several more years.
March 26 will be a day that lives in infamy for the US monetary system! The Petro Yuan backed by Gold is to be born on this day.
Yes, but I don’t think the impacts to the dollar will be felt immediately. In fact, I think it may take a couple years because the new oil-for-yuan market needs to grow and mature. Of course, I could be wrong!
OMG this makes my day! I can correct the Penzo because I caught him in total error! Dragonflies actually live for months as nymphs and then when they take wing they still live for no shorter than several days and in some cases for several weeks. No dragonfly only lives for 24 hours, in fact no insect does. Wow, Len Penzo corrected by a hick who lives just a short ways east of Joe in Texarkana. But then we are covered up by dragonflies here in swamp country!
Well, it just goes to show … not everything you read on the Internet is true! Thanks for the fact check, Steve.