Friday, October 18, 2024

This is why traders fail, Trader

Human emotions make trading and investing difficult. Do you know what I'm talking about?
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Trader,

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MarketClub's entry and exit signals eliminate human emotions.

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Sail Songs-SiriusXM This Week

Songs with "sail" in the title.

Tune in Saturday October 19th to Faction Talk, channel 103, at 4 PM East, 1 PM West.

Phone #: 844-686-5863 

Twitter: @lefsetz

If you miss the episode, you can hear it on demand on the SiriusXM app. Search: Lefsetz 

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The New Sally Rooney Book

"Intermezzo": t.ly/PviP_

Don't run out and buy this book without reading the below!

Sometimes people see a headline and they take that as a ringing endorsement. This is a little more complicated.

In case you don't know, Sally Rooney is the hot new Irish writer.

Well, not so new anymore. Her first book came out in 2017.

But really it was her second novel that broke her big time, "Normal People." You may have seen the series on Hulu, which got rave reviews, it's got a 91% critics rating and a 92% audience rating on RottenTomatoes. My inbox continues to field messages from people advising I watch it. I tried, I gave it about ten minutes, but I had to stop, because the series did not comport with the book, which was excellent. I recommend "Normal People" without reservation, go for it.

In the wake of "Normal People" I went back and read Rooney's debut, "Conversations with Friends," and the follow-up, "Beautiful World, Where Are You," which was also made into a Hulu series.

And those three novels are of a stripe. At least to the degree I can remember. Recent graduate books, twentysomething books, "Intermezzo" is something different.

So I was on a plane deciding what to read next, and after a couple of sentences I wasn't in the mood for "Intermezzo," not that that's a put-down, it's just that certain books are for certain times, they hit you in a certain way.

So I started "All This and More," which has a fascinating construction, you make your own way, there are choices and you continue or jump forward in the book. And it's highly readable, but I was wondering if it was highbrow enough. It's 474 pages long, and my Kindle told me it would take in excess of twelve hours to read and...

Yes. I like soul-fulfilling books. Not lowbrow. Forget genre fiction...romance, crime, mystery... Occasionally crime and mystery hit me, but usually there's a twist at the end and it's unsatisfying.

And then there's Kristin Hannah's latest, "The Women," which has not left the best seller list since it came out. I was so disappointed, I loved Hannah's book about Alaska, "The Great Alone," and I wholeheartedly recommend it. "The Women" was highly readable, yet at times skin deep and predictable, and when the Vietnam sequence was over... Let's just say I didn't find it to be empty calories, but close. But if you're someone who likes to get involved in a story, especially if you're a woman, this might be what you're looking for. (And don't call me sexist, I've yet to find a man who has read "The Women," and every woman I've talked to about it loved it.)

And I gave up on Rachel Kushner's "Creation Lake." There was too much philosophizing by this character about the past, and not much happening, and then a friend sent me a scathing review, which said pretty much this, and I stopped twenty percent in. Primarily because the book wasn't calling out to me, which meant I was scrolling social media too much instead of reading, I need a book that is the main attraction, so I'm not distracted.

But on the next day, on another flight, I decided to give the new Rooney book a chance. And I'll say it was off-putting. As in it was dense. Paragraphs can take up a full page. And...

Perspective and timing can change in the middle of said paragraph. Meaning "Intermezzo" is not an easy read. Not as hard as "Ulysses," but far from a breeze.

And that's something that comes out in "Intermezzo," the writing tradition of Ireland, and the drinking culture. You don't have to be rich to be a star in Ireland, if you're a talented, respected writer. And people are constantly going to the bar, not only for the drink, but the conversation. I miss those days, mostly nights in college, not that I want to imbibe, but arguing with the concepts, I'm always up for that.

But just when I was about to put "Intermezzo" down...

I got hooked on the insight.

Let me give you the outline, I don't think it will ruin your reading experience whatsoever.

The father of Peter and Ivan dies of cancer. How do they cope in the aftermath, how does it affect their love relations, how does it affect their relations with each other.

In other words, there's a lot of real life.

Rooney is throwing the long ball, trying to take a great leap forward, and although I won't say she's completely successful, she delivers what the music used to, the aforementioned insight.

You're not going to know which way the wind blows by listening to today's music. You're not going to go deep into the emotions of a person in today's music. It's all surface. But in "Intermezzo"...

Do you hate yourself so much that you contemplate suicide?

Even if you're never close to taking your life, are you ever consumed with self-loathing?

Do you think you can never be loved, because you've been an outsider all your life, never mind wearing braces today? But you still have desires, you still have crushes.

Can you not cope without Ativan or Xanax or... You'd be surprised how many people take these drugs to get by. They're prescribed for anxiety. And they are extremely habituating, take them for a week or two and...good luck getting off.

And what are the dynamics of the family, is child father to the man?

And what's it like being a member of a broken home, with your mother seemingly more enamored of her new, adopted family than her blood relatives.

Endless feelings are exposed. Endless questions confronted. Just like in regular life. We're making decisions all the time, are they the right ones? And sometimes you're convinced you're right and you're wrong. And are people to be trusted? And what looks like it won't work on the surface...can it?

And not everybody is a star, not everybody is setting the world on fire. There are many people, anonymous to the world at large, earning a living. Where's the meaning for them, for you?

So I continued to plow through "Intermezzo," I gave up on "All This and More," and I'm not sure I'm going to go back to it, since Libby has fed me more enticing books.

And I hate to admit it was somewhat of a slog. You're reading a paragraph, which is nearly endless, and then you question whether you just tuned out for a second or if you missed something and you have to reread to figure out the perspective, the speaker, the tense...and this is frustrating.

Which is why I do not wholeheartedly recommend "Intermezzo."

And the weird thing about these follow-ups by highly regarded writers is the reviews are excellent, effervescent, and you start to read and...you wonder if you're the only one who feels the way you do, that it's not that good, not that readable. Ultimately you have to trust yourself, but sometimes you continue reading because of the critical raves.

I really couldn't believe "Intermezzo" was the book everybody was loving. It was far different from what came before. Once again, it was far from a simple read. Didn't anybody else notice this?

Now there's some brilliant insight in the book, and I want to quote a few words:

"She tries to extract from him some valuably hurtful information and he tries to conceal from her any aspect of his life in which he suspects she might gain a foothold."

This was the last forty years of conversation with my mother. She probed, she wanted to know what was going on, and when I told her, she turned it back on me, and it felt so bad. Amazing how much power mothers have over children.

Which brings me to:

"Can the deep childhood impulse to trust one's mother, to agree with her against oneself, ever be wrestled down by the comparatively thin force of reasoned argument?"

My mother didn't dress like an adolescent, but she was the straw that stirred the drink, the driver of the social scene, and an expert on popular culture. And then I went to college and...

I learned she didn't know everything. And on my first visit home, it didn't take long to lock horns. You see my mother was not one to back down, to say she was wrong, assuming she was invested. On trivial stuff, sure, but if she cared...she was right and you were wrong, and she didn't like you questioning her viewpoint. Which ultimately led to my first quote from the book, me withholding.

"But when I'm talking to you—I guess, to be honest, you seem kind of interested. And then I probably get carried away a little bit, wanting to tell you things."

Something happened to me in the early nineties. I could no longer tell my story. I'd like to tell you I've recovered from that... I used to be effusive, in this way my mother's son. But then...

I found out most people weren't interested anyway. I'd be speaking on the phone and they'd be clapping the cupboard doors, talking to someone else, why go on? And then there are the people who tell a long story and you can't really interrupt, so you surrender. Furthermore, if you are quiet, you learn so much, people will tell you anything if you ask them questions...

But, if you're interested, if you seem to truly care, and I get that signal, you can't shut me up. I'll tell you details of my life, give you the history of skiing or computing, but...

If I see even a hint of distraction, I never get to this spot, I never amp up, I never marinate in the story, I stop.

"exhausted satisfaction after swimming"

That's it! I've never seen it described so well. Our Little League coach told us not to go in the water the day of a game, because it would tire us out.

And just last week I had an amazing idea I was going to lay down on the computer but then we all went to the beach and when I got back, all I could do was lay on the bed, useless, but happy.

"Did you ever try to play a game with a child, and they start laying all their toys out exactly where they want them. And they're making up all these rules, and they get annoyed if you don't follow along. That's you. That's actually how you treat people."

It's the first part of this passage that wowed me. Because I've lived this numerous times and never discussed it with anyone, never mind seeing it written down. There's a certain age where kids do this, before their imagination is killed by schooling, it's amazing to watch. As for the latter part, the behavior of the character...I know too many people like this. Who insist you live in their world by their rules.

So that's just a taste of "Intermezzo."

Why am I writing about it?

First and foremost because it's such a hot book. I wanted to give you my take. I don't want you running out and buying it and expecting "Normal People."

But I also wanted to convey that Rooney is getting to the essence, which is too often overlooked in popular art. They want to make it palatable. We've heard all the stories, about movie and TV executives wanting to change things, sometimes the heart of the story, because they think the general public won't approve. And today's music is about removing the edge, at the same time believing the edge is still there! The more you compromise, the more you lose the edge. The vision is important, the vision is key. Film and television are collaborative arts, music is not. And when it is...you get product, you have commerce, but you don't affect and change lives, which is the true power of artistic endeavors.

Think about that... If you're not going to change someone's life, make them identify, feel so not alone, why are you even starting? Why do you think people are going to want to hear your tunes? And changing someone's life can be just a riff, or it can be lyrics, but sans this...

Which is why Berklee students don't dominate the charts. Because you can guide people a little, but artists are more born than made. It comes from perspective. You see things a little bit differently. You're driven to express your viewpoint. Which is why you rarely find a football captain or head cheerleader making a world-shaking record. They don't need it. They've already got what the artists want, to be understood, and even more, included.

And there was some interview with Sally Rooney in the "New York Times" that drove headlines elsewhere and made it look like Rooney had an edge and I...ultimately gave up reading it.

Everything Rooney has to say is in her books. You don't get Bob Dylan explaining his work. That's part of the essence, the listener dives in, analyzes and makes it their own.

But you've got to feed the starmaking machinery in the popular culture...

So I have no idea who Sally Rooney really is. And I don't have a need to find out. But you don't lay all this down if you're not an observer, if you're going through life with blinders, willy-nilly, from one interaction to another, never thinking about it.

A life of contemplation...

Most people say it doesn't pay.

But that's really what life is all about, contemplation, trying to make sense of your life and the world.

And a good artist guides you.

Once again, pick up "Intermezzo" at your peril. Sometimes I recommend slam dunks, this is not one. You've got to dedicate yourself, put in the time. And I won't say the ending is so satisfying, but that's a very small part of the book.

But before that...

Rooney rings the bell of life.

What more can you ask for?

Not much.

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Let’s Go To The Charts

reviewing the tickers I shared with you the other day
 
   
     
   
   
   
Tips, tricks, tutorials and even trade ideas?
Get them all in my FREE Telegram channel!
   
   
   
   

Hey traders,

I’ve got some quick updates on the trending stocks I shared with you the other day.

Watch today’s video and I’ll tell you exactly what I’m seeing in each of these charts.

 
 
 
Watch Jack’s Video
   
   
Trade well,

Jack Carter
P.S. This new breakthrough puts my 40 years of trading knowledge in the palm of your hand.
   
   
 

One chart you have to see

Plus: why Netflix makes a bullish case for tech
 
   
     
   
 
OCTOBER 18, 2024
   

Hey y’all,

Happy Friday! 

There’s one kind of “old school” stock fundamental that I can’t help but pay a lot of attention to: P/E Ratio.

Now, I know P/E Ratio isn’t without its critics. And it certainly isn’t without flaws.

I would never use it in a vacuum. And I don’t necessarily think it’s the best evaluator on a case-by-case basis: i.e., if NVDA’s P/E ratio is 64 and CHWY’s is 34, that doesn’t mean CHWY is automatically the better stock to own.

However, on a broad scale, I do think P/E can tell us something about the health of companies. 

And while all of us trading junkies might put a lot of other things first, we need to occasionally step back and remember that much of the stock market is made up of retail investors trying to buy shares of healthy companies.

And that’s why this chart caught my attention when Graham Lindman shared it in our company Slack chat earlier this week:

 
 
What that chart shows us is that, since 2021, even while stocks have climbed 38%, their P/E ratios have dropped 19%! 

Now, remember: the price of a stock is half of the P/E equation. It’s the numerator in that fraction (unless it’s the denominator. Sorry, Mr. Kohrer, don’t hate me for forgetting! — it’s the top one, is my point!)

So you would think that P/E ratios would automatically be swelling higher if stock prices are growing substantially.

But that isn’t the case right now. 

Even as stock prices soar, P/E ratios are not keeping up — in some cases, they’re even dropping! 

Meaning that companies are better values to own NOW than they were three years ago, despite some pretty fast and furious growth in the stock.

One example of this comes on a stock we saw shoot higher on earnings this morning: NFLX.

Take a trip back with me to 2021. Joe Biden has just been inaugurated President, Tom Brady is still playing football, and you can’t turn on a radio station without hearing Olivia Rodrigo sing “Drivers License.”

Back then, we were in what I think of as the “Work from Home” (WFH) Bubble. We saw a ton of companies that were short-term darlings from the pandemic soar to astronomical P/E ratios. 

Basically, in the wake of COVID-19, any company that could help you enjoy life without coming into contact with other human beings was seeing tons of money flow in from Wall Street. And Netflix (NFLX) was a prime beneficiary. 

In 2021, NFLX had a P/E ratio as high as 95 — which most people would consider insanely high. And many rightfully did at the time.

Fast forward to the end of the year, and the “bubble” had popped, seeing companies like NFLX, ZM, DOCU, etc. bleed out aggressively all year long. 

Now, take a look at this chart and what’s happened since then. There’s a lot going on, I admit, but I’ll walk you through it.

 
 
Since the start of 2022, NFLX’s stock has climbed about 350% (that’s the green arrow at the top)...

Meanwhile, the blue line underneath, that’s the P/E ratio. Sure, it’s gotten higher since NFLX’s price bottomed out late in 2021. But it has not nearly kept pace with the price.

And, in the two years since, NFLX has had a series of mostly positive earnings reports. Good fuel for the fire of driving the stock higher.

I think this is a significant trend. Especially as interest rates get cut, we’re going to see even more money flow OUT of money market accounts and into the stock market, looking for “safe” stocks to buy. 

Now, Netflix might not spring to mind when you think of stable investment stocks, and its lack of a dividend hurts it in that capacity.

But the general idea, that companies are getting more valuable to own even as stock prices climb higher, is pretty significant.

P/E ratio might not be the end all, be all, but I think it’s painting us a pretty clear picture that the market is extremely healthy right now, no matter what the talking heads might say.

Remember: as Jack Carter pointed out to me yesterday at his 3pm briefing, the stock market is NOT the economy. Even if things in the economy are rocky, that doesn’t mean the market is heading lower! 

So I wouldn’t be too concerned about a bearish turn right now. We might see a small correction at some point, but that will just  be another opportunity for more money to pile in.

Oh, and by the way: if you missed Jack’s briefing yesterday, it was GREAT, and he did it again today, so make sure to grab the replay here.

To your prosperity,

Stephen Ground
Editor-in-Chief, ProsperityPub

 
   
 

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