February 8, 2018

On Thursday, the DOW ended the day down 1033 points or 4.15%. The S&P 500 was down 3.75% and Toronto was down 1.7%.

The biggest decliners on our list included Toll Brothers down 5.0%, American Express down 5.6%, Visa down 4.8%, FedEx down 4.7%, and the Boston Pizza units down 4.1%.

Some of the rate reset preferred shares were among the few winners.

As of 10:15 pm eastern time, the futures market shows the DOW up 20 points.

Meanwhile another “government shutdown” looms in the U.S.

The DOW today is only down to levels of very late November. I believe I mentioned in November and December that the market seemed to keep rising over and over again on the SAME news, the news of the income tax cuts. The market rose very sharply until it peaked at the end of January. For months the market seemed oblivious to lots of risks including government shut downs, trade wars, and even potential serious problems with North Korea.

For those with equity investments, it is never fun to see the markets go down. But really, it’s hard to see the U.S. market declines in February as being much more than a dose of rational thinking. The markets had begun to price in perfection or something close to it.

It has been in the news that people betting that the volatility index called the VIX would stay low have lost money. Searching this site it appears I have never ever mentioned the VIX. And why would I? It was certainly nothing that I would ever advise investors to bet on one way or the other. I don’t even bother with options and part of the reason for that is that they tend to speculative and they are also not easy to understand. I have a lot of financial education but I know that there is a ton of math around options that I simply don’t understand. Meanwhile though it seems like a lot of people out there with probably not that much math and finance education think they understand options and the VIX and options on the VIX very well. I am happy to let these people make their bets against each other. I prefer investments where money flows mainly or at least partly from customers of businesses to owners as opposed to merely between owners/investors.

I note the news today that the National Energy Board will be replaced with something new. I mentioned on October 5 that the NEB┬áprocess was becoming increasingly complex and suffocating. I worked for a utility regulator for 13 years and I believe I mentioned somewhere along the lines that I thought that the regulatory process was basically collapsing under its own weight. I’m not hopeful that the new process will be much better. Various groups say they want to heard and listened to. What they really mean is that they want the decision to go in their favor. And they are not willing to accept decisions that go against them. How does one fix that? Perhaps by enforcing the law?