TOPLEY’S TOP 10 July 08 2024

1. Last 10 Years Post July 4th

Bespoke Investment Group- The next chart shows the consistency of positive returns for the S&P 500 and all eleven sectors. Here again, Energy is the only exception to the trend of consistency over the following three months not being worse than the one month.  Additionally, the only sectors that have experienced positive returns more than 50% of the time for both periods are Financials and Technology.

2. 500 Days Since the Last 2% Down Move in the S&P

Nasdaq Dorsey Wright
We have gone 500 days since the last 2% down move for SPX (2/21/2023). This is the fourth longest streak since April 1987 and will move into the third-longest if we do not see a 2% drop in the next 11 calendar days. Going so long without a 2% drop seems unnatural and has been highlighted as a point of potential concern for some investors going into the second half of the year. A worried investor may suggest that since we have gone so long without a 2% daily decline, we’re just increasing our likelihood for more 2% declines soon. Not necessarily true.
Most of the 2% days happen within close proximity to another 2% day. Only 336 trading days since April 1987 have seen a 2% decline in SPX, which equates to roughly 3.5% of total trading days. Out of those 336 days, 206 instances occurred within two weeks of another 2% down day. That skews the averages to favor more frequent events annually. Several periods saw multiple extended runs between 2% down days. Only eight 2% down days occurred from August 1991 to March 1997, including three consecutive stretches with more than 350 days between events. There were 10 such events from June 2012 to June 2015, with six of those seeing at least 100 days between events. We are eventually going to see another 2% daily drop in SPX, but that doesn’t mean we have to “catch-up” to the 16 day annual average for such events.

3. Hedge Funds Increasing Small Cap Shorts

4. You Thought Active Managers Can’t Beat the Market 

5. Higher Rates Equals Less Pools

POOL stock back to 2022 correction levels…-30% from 2024 highs

6. Dow Transports -4% 2024

Tech dominating market…This chart shows Dow Tranports versus S&P..straight down since mid-2023

7. Lumber Prices Sideways -75% from Highs

Lumber 18 month sideways channel…see which way it breaks.

8. Lumber Hit $1700 in 2021

9. Close to 50% of America Would Remove Both Presidential Candidates

10. Get Over Fear of Losing Money

On Fear

Get over the fear of losing money so you can make money
Money and fear. For so many of us, they go hand in hand.

  •  Some people fear losing the money they have
  • Other people fear that they won’t be able to make money again in the future

It’s natural to fear loss. I’ve been there. I lost close to two-thirds of my money within a year when I first started investing. 
It’s painful to lose a significant amount of money. And that fear of loss has affected me so badly in the past that I became afraid of getting back into investing.
This same fear makes many people avoid the stock market. But if we let this fear control us, we will never take any risk.
Just like in any other aspect of life, there will always be risks involved when it comes to wealth building. Whether that’s in the stock market, real estate, or starting a business – you can always lose money.
But the problem is that we often get too fearful. And as a result, we never even invest. If we do invest, we don’t invest nearly enough.
End result: You leave a lot of money on the table.
Look, we’ve all hear the same old story of, “Many of the richest people in the world built their wealth with stocks.”
Think of Warren Buffett, Jeff Bezos, Elon Musk. All their wealth is created through the stock market.
We also can invest in stocks. But for some reason, we get fearful.

  • “What if I lose my money?”
  • “What if there’s a recession?”
  • “What if the dollar collapses?”
  • “What if there’s another war or pandemic?”

I get it. I’ve had those thoughts too. Especially if you spend some time on social media, you think the world is about to end.
But just look at the past 100 years. We’ve dealt with world wars, natural disasters, recessions, pandemics, currency issues, elections, social unrest… and yet, the stock market has gone up through everything.
What’s going to stop it if those things can’t stop it?
We need to overcome the fear of loss if we want to build long-term wealth. After all, when it comes to passive investing, losses are only temporary. 
Marcus Aurelius said this about time:
“Time is like a river made up of the events which happen, and a violent stream; for as soon as a thing has been seen, it is carried away, and another comes in its place, and this will be carried away too.” 
In a similar way, the stock market is also like a river, which keeps flowing no matter what’s going on in the world. Sometimes the current is faster or wilder than other times. But the river always flows in the same direction.
The stock market experiences its ups and downs, but on the whole, it keeps going up.
Those ups and downs are natural. Something temporary. 
Acceptance of this nature takes away our fear of investing. When we zoom out and stop looking at the day to day moves, we realize that it’s more costly to not invest.
The main takeaway from the Stoics is this: Never fear something that’s natural.
Next week, we’ll see how we can combine the skill of managing both fear and greed to become a more consistent investor.
All the best.