Daily Commentary

MarketMinder’s View: As always, MarketMinder is nonpartisan, favoring no party nor any politician. We discuss politics solely for its potential market impact. This article makes a big deal about presidential contenders’ economic plans (e.g., protectionist policies, expansive government overreach and unsustainable deficit spending) and their purportedly negative effects. But a few things to note here for investors. First, what politicians say on the campaign trail often bears little resemblance to what they can pass once in office. The victor tends to moderate once in power, as the president must work with the legislature to pass new laws. (Yes, the president can use executive orders and the regulatory apparatus, but court challenges block a lot of it, as we have seen lately with some flagship regulatory changes.) Second, Biden and Trum’s respective policies are hardly secrets, which allow markets to pre-price them, sapping their surprise power. Third, even if some policies do pass, compromising with Congress leads to a watered down result—the changes are seldom as sweeping as promised. Keep these points in mind as election season heats up. Campaign rhetoric often stirs anxiety in the lead up, but as races shape up, uncertainty fades—becoming a tailwind for stocks, which is why presidential election years are frequently positive for stocks.

MarketMinder’s View: Here is a deep dive into an investment scam we think is particularly pernicious, one “selling the promise that it could teach anyone, particularly teens and twentysomethings, how to become a savvy retail investor.” While the hook seems unique, the telltale signs of fraud are all too common, which we think people of all stripes, not just investors, can benefit from recognizing. First, the scam’s perpetrator “flaunted luxury cars, private jets and apartments across continents.” If an investment “guru” is showing off their lavish lifestyle as a promotion, that is a warning sign. Then there are the flashy tactics that fall apart upon closer scrutiny—the flash hides their nonsensical nature. “He studied the stock market and started charging people $5,000 for six months’ access to his easy-to-learn trading strategies, like looking for repetitive patterns in price moves and timing when to sell an asset.” As every investment disclaimer’s fine print says, past performance doesn’t guarantee future results. Another red flag: too-good-to-be-true returns. “‘We have a product that matches the highest-income earners in the arena,’ he said in a video, mentioning the $30 million in yearly bonuses Goldman Sachs traders make.” As always, do your due diligence with any investment strategy/service/product and remember, if an opportunity uses emotion to appeal to you (whether through fear or greed), take a moment and tap back into your logical side—demands to “act now” are another red flag.

MarketMinder’s View: This article makes the astute observation that “Data plays a pivotal role in all types of investing,” so we agree investors benefit from knowing how to analyze the reams of information pouring out of our screens every second. However, we think there are limits, and abundance doesn’t translate to quality or usefulness. This piece looks at four popular categories: real-time market data, “alternative data” like satellite and logistics data, options pricing data and whatever folks can use to understand new asset classes. All interesting stuff, but the problem with all this data is that anyone can use it, rendering it all widely known and pre-priced. To get an edge, you must interpret it differently and more correctly than the masses. Even then, these indicators can give you insight into what is happening or just happened, but they can’t tell you what will happen. There is no crystal ball, no magic tool. So with that in mind, does accessing an abundance of niche data actually help, or does it add complexity without much benefit? Again, we are pretty nerdy and love a good data trove. But it isn’t just about having the data, but rather the wisdom and knowledge base to filter what doesn’t matter and correctly analyze what does.