Stock Market Closed for Thanksgiving - Last Thoughts Before Turkey
The stock market closes for Thanksgiving. It's open Friday, but only for a half day. A lot of traders won't even show up. Volume will be light.
I mention this for two reasons: 1) to remind myself it's time for a break and some needed rest; 2) to remember something that's unique about the stock market (more about this below).
As for the needed break, lots of folks I know are pretty calm these days. They're pretty convinced that the recessions over, and the financial crisis is kind of winding down. They're going back to managing their money like they did before 2008.
Some of them, of course, remain alert and worry about things like the ongoing Irish bank crisis, a shaky Euro, a shaky dollar...come to think of it, what's not shaky these days?
In any case, you get to the point where you just need to take a deep breath, read something besides investment stuff, listen to good music, be with family, eat and drink great food - just real, human, good stuff. So that's where the break comes in. It's time to just live - get my eyes off the laptop screen, stop reading professional publications and investment ideas.
What about what's unique about the stock market? It's got to do with why most of the time when people talk about the markets - even the economy - they typically start by talking about the stock market.
But aren't their other markets out there? Bonds and commodities come to mind. Or what about currencies? Foreign exchange trading (trading currencies) dwarfs the stock market. How come people don't quote these other markets as much as the quote what the "Dow" is doing?
Here's the reason: the stock market holds a unique, irreplaceable place as an indicator of what's going on. None of these other markets - even though they might be a lot bigger, with a lot more trading going on - tells us what's really happening to business out there. Why's that?
It's just because when you buy a stock, you're buying a business. It's not like when you buy a bond, where you're just lending to a business. With a stock, you're buying a small piece of a business. And there are still enough investors (as opposed to speculators) out there so that by watching whether there are more buyers than sellers - or vice-versa - we can get some feel for what people who are putting their money on the line are thinking is coming up in the economy in the weeks and months ahead.
After all, if you're thinking businesses in general will be growing, you're thinking the economy will be in pretty good shape for a while. So you're looking to buy one of those businesses that will benefit from the general growth of the economy.
(Of course, you might be one of those who just buys businesses cheap and doesn't worry about the economy. That's OK, as long as you don't mind your investment going down a gazillion percent like it probably did in 2008.)
On the other hand, if you're thinking businesses in general won't be growing all that much - or even might shrink - because the economy looks kind of sick these days, you may not want to put your money out there and buy shrinking businesses.
And so the stock market shows us what people are thinking - at least what they're thinking might happen in the coming weeks and months, most likely somewhere between 6 - 24 months out.
Of course, deciphering what's going on isn't all that easy. In fact, a lot of the time, it's mostly a mystery. Like right now, where things don't seem to make a heck of a lot of sense and the market's kind of meandering around in a trading range. It's like no one's really committing one way or the other.
Hey, why am I talking about this now? Probably to remind myself that once Thanksgiving's over, the great mystery of the stock market will still be there. And I'll be back next week trying to make sense of it all - and sometimes share some of my ideas with you, for what it's worth.
Meanwhile, let's all have a Happy Thanksgiving. I'll be cooking up a storm, as we're expecting a larger-than-usual contingent of family coming over. In fact, it's going to be time to start prepping later today. And this is a break? Sure. Family, food, and all that really isn't work, is it? Enjoy!
I mention this for two reasons: 1) to remind myself it's time for a break and some needed rest; 2) to remember something that's unique about the stock market (more about this below).
As for the needed break, lots of folks I know are pretty calm these days. They're pretty convinced that the recessions over, and the financial crisis is kind of winding down. They're going back to managing their money like they did before 2008.
Some of them, of course, remain alert and worry about things like the ongoing Irish bank crisis, a shaky Euro, a shaky dollar...come to think of it, what's not shaky these days?
In any case, you get to the point where you just need to take a deep breath, read something besides investment stuff, listen to good music, be with family, eat and drink great food - just real, human, good stuff. So that's where the break comes in. It's time to just live - get my eyes off the laptop screen, stop reading professional publications and investment ideas.
What about what's unique about the stock market? It's got to do with why most of the time when people talk about the markets - even the economy - they typically start by talking about the stock market.
But aren't their other markets out there? Bonds and commodities come to mind. Or what about currencies? Foreign exchange trading (trading currencies) dwarfs the stock market. How come people don't quote these other markets as much as the quote what the "Dow" is doing?
Here's the reason: the stock market holds a unique, irreplaceable place as an indicator of what's going on. None of these other markets - even though they might be a lot bigger, with a lot more trading going on - tells us what's really happening to business out there. Why's that?
It's just because when you buy a stock, you're buying a business. It's not like when you buy a bond, where you're just lending to a business. With a stock, you're buying a small piece of a business. And there are still enough investors (as opposed to speculators) out there so that by watching whether there are more buyers than sellers - or vice-versa - we can get some feel for what people who are putting their money on the line are thinking is coming up in the economy in the weeks and months ahead.
After all, if you're thinking businesses in general will be growing, you're thinking the economy will be in pretty good shape for a while. So you're looking to buy one of those businesses that will benefit from the general growth of the economy.
(Of course, you might be one of those who just buys businesses cheap and doesn't worry about the economy. That's OK, as long as you don't mind your investment going down a gazillion percent like it probably did in 2008.)
On the other hand, if you're thinking businesses in general won't be growing all that much - or even might shrink - because the economy looks kind of sick these days, you may not want to put your money out there and buy shrinking businesses.
And so the stock market shows us what people are thinking - at least what they're thinking might happen in the coming weeks and months, most likely somewhere between 6 - 24 months out.
Of course, deciphering what's going on isn't all that easy. In fact, a lot of the time, it's mostly a mystery. Like right now, where things don't seem to make a heck of a lot of sense and the market's kind of meandering around in a trading range. It's like no one's really committing one way or the other.
Hey, why am I talking about this now? Probably to remind myself that once Thanksgiving's over, the great mystery of the stock market will still be there. And I'll be back next week trying to make sense of it all - and sometimes share some of my ideas with you, for what it's worth.
Meanwhile, let's all have a Happy Thanksgiving. I'll be cooking up a storm, as we're expecting a larger-than-usual contingent of family coming over. In fact, it's going to be time to start prepping later today. And this is a break? Sure. Family, food, and all that really isn't work, is it? Enjoy!
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