MARKET OUTLOOK:

Recently, gloomy headlines have taken to note that stocks have moved in larger ranges than has been accustomed these past months. Not surprising really. When we get comfortable, change is sure to follow. Night follows day. There is a rhythm to things, and like all complex organisms, the world according to market prices has its rhythms. 

Good news is uninteresting. Bad news, on the other hand is eye-catching, and for the past 18 months, doomsayers have been calling into question the steady advance of stocks. The hallmark of a durable advance is skeptics. That skeptics will be right eventually as to acknowledge that a stopped clock is right 2x per day. That is the certainty of a clock, but it’s a bad way to invest, much less tell the time.

What gloomy headlines get wrong is, it’s about your investing time frame, not their deadline for today’s news. Headlines know nothing of your time frame, your objectives, or the skill with which you choose to handle your savings. And yet, the biggest news organizations in the world continue to broadcast stormy music. That is their business model (Breaking News!), and it vies for your attention. 

Recently, a headline screamed out to the affect that ‘with the Fed meeting about two weeks away and the uncertainty around Omicron, liquidity will likely be challenging.’ This doesn’t make for a great backdrop for equity risk. People just want to get through December. Nobody wants to ruin their year in the remaining few days down the homestretch.

We suggest you stick to long-term investing, focus on owning great franchise companies and avoid sensational headlines. This time of the year is a classic time to be bombarded with forecasts and warnings of what is to come. Ignore it. This time of the year is no more likely to generate good short- term thinking than any other week of the year. The companies you own continue to chug along irrespective of the gloom and the forecasts for the market.  

Heading into year end, we encourage you to avoid racing against these kinds of societally placed and time-sensitive markers of performance and success, these are false finish lines. Successful investing is a continuum of discipline. Everything else is just noisy narratives. 

TOP PICKS:

Disney (DIS NYSE)
Disney is the most dominant media company in the world. Presently, investors are preoccupied about subscriber growth of Disney+. What investors are missing is that the company has a long history of leveraging technology to squeeze more mileage out of the massive intellectual property bank they have. We think Disney will be one of the biggest beneficiaries of AR and VR technologies over the next few years. Disney is trading at discounts to where it historically has if investors consider anything over a two-year time frame. Seeing as it takes about two years to make a Disney product, that time frame is a minimum consideration in our opinion.

Raytheon Technologies (RTX NYSE)
Raytheon is a military and aerospace conglomerate that has always been highly regarded from a technology and management perspective. The civilian aerospace market has suffered during the pandemic, but the company has been aggressive in restructuring its operations. As the virus recedes in intensity and commercial traffic continues to rebound, we expect RTX to surprise on the upside. 

Synopsys (SNPS NASD)
Synopsys is one of two companies that is a supplier to those that build advanced integrated computer chips. As the world increasingly pushes toward more electronic integration and more companies design their own specialized chips, Synopsis is a winner. Why buy the capital-intensive manufactures when you can be the seller of the equipment to the whole industry?

PAST PICKS: September 23, 2020

JP Morgan Chase (JPM NYSE) 

• Then: $92.74
• Now: $162.68
• Return: 75%
• Total Return: 80%

Facebook (FB NASD) 

• Then: $249.02
• Now: $324.67
• Return: 30%
• Total Return: 30%

Bank of America (BAC NYSE) 

• Then: $23.26
• Now: $44.58
• Return: 92%
• Total Return: 96%

Total Return Average: 67%