“It's the same old story, same old song and dance, my friend”

Released in 1974, “Same old Song and Dance” was written by Joe Perry and Steven Tyler in about 25 minutes while sitting in a studio fooling around. The song makes little sense but has always been one of Aerosmith’s most popular songs live.

It’s Mid-February and things look to be going back into a familiar pattern. We have earnings season with its hits and misses. We have FOMC meetings once a month, an announcement and no surprise. We wait a week and see what the Fed Governors actually talked about.
We have a lull in the business cycle.
Then we start it all over again.

That’s the business news cycle in a nutshell. Trading or investing opportunities come along periodically. Some geopolitical issue arises and upsets the pattern for a short period of time. If I were to give a class on investing it would be structured around these very things.
To trade or to invest well, you have to understand the macro picture and its impact on your micro trade or investment. Understanding the significance of any one event on any one trade or investment is what separates the successful traders and investors from the rest of us.

The thing that people still do not understand is that when you are in this lull, there are still opportunities to trade or invest and make money. It’s just the money you will make will be limited because of this lull in the market and rarity of market moving events.

I tend to stay out of the game during these periods. Maybe it’s too much work for too little return. Maybe it’s because acting out of boredom can cost more money than I anticipated. Whatever the reason, I have learned that there are very few profitable patterns in this lull.

Events that can and probably spike the market in one direction or the other are still out there. The China/US trade negotiations, OPEC trying to take back control of the oil market, some new twist in the Presidential saga. Any or all of these could play a bigger role in the market’s direction short term and if you need to be involved, that’s where the catalyst will come from.
I am an investor and a short-term spike or drop from current news does not do it for me. It’s earnings, growth potential, what I think of the sector, and what I think of a company’s management.
In coming columns, I will go over my thoughts on trading versus investing and why I chose one over the other.

As I just went over, we are in a lull, the markets may be slowly marching to a new record, I don’t find the risk to be worth it at this stage.

50% Stocks
25% Fixed Income
25% Cash