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Quarterly Capitalism & Investor Mistakes

The opinions expressed by columnists are their own and do not necessarily represent the views of

Move over, Communist China, Hillary Clinton wants to bring your central planning policies to our economy and stock market. Punishing investors for making money is not the only brilliant gem on her laundry list.


Hillary Clinton’s stealth attack on the investor class and corporate balance sheet continues. Ironically, I agree with her comment on the “tyranny of today’s earnings report.” I have griped about it for years. In fact, this does not have anything to do with corporate America and hiring. In the end, it only removes the prerogative of individual investors. That said, the average holding period of stocks is abysmal.

The willingness to sell at a loss, but not at a profit, has created wild gyrations and is crushing the investing experiences for too many individuals. The average hold time has gone from six years to less than six months. There is no way a good company becomes a bad company within six months, even if the stock is lower.

However, the fact is that as more individuals have gotten into the market, the action reflects more on Main Street’s angst. Rich people have the comfort of holding and riding the waves, while the average investor, having seen or endured two to three market crashes, believes that the end is around every corner. Still, there’s no doubt stocks that made monster moves in the last couple of weeks from Google (GOOG), Amazon (AMZN), to Netflix (NFLX) have left behind a pile of individuals who have taken financial losses during the numerous dips, pullbacks, and corrections in those names.

It’s a great cautionary tale as we deal with a market that’s obviously lost its footing. It’s not a situation where there’s fear in the air, but one where the afternoon selloff is like clockwork; thereby discouraging would-be buyers from stepping up as (there has been very late buying that presumably is sold during the early morning that bounce the next morning). Shares in a lot of good companies will be sold at a loss this week, which is a reflection of emotional selling. By the same token, I get that it is hard to live with big losses.


It is why it’s important to understand that the shares of great companies often come back, even names such as International Business Machines (IBM) and McDonald’s (MCD). They might see their shares at all-time highs next year.

Furthermore, I advocate that you must have names in your portfolio that are working right now, allowing you to hold a few high pedigree - high potential dogs. It’s a delicate balance, but long-term knee-jerk reactions and focusing on not living with pain just makes it worse in the long run. As for a federal government headed by Hillary Clinton, punishing investors for making money in less than 2 years, it will largely not only stop people from investing, but it also will not have any impact on corporate America or job creation.

Jeff Bezos Revenge

For years, Jeff Bezos was ridiculed for building a company rather than bolstering the bottom line. Actually, it was fine with investors for a long time until it wasn’t last year. It’s true, the company posted earnings last week and have been more disciplined, but the fact is that Bezos main focus is building a great company, not engineering earnings that beat the Street by a penny. Yet there are a lot of companies who are caught up in earnings reactions.

True, investors can take stocks to the woodshed on the smallest of earnings misses, but five-year plans should be five-year plans, regardless of fickle investors.


By pointing this out, I continue to say, however, it is not the federal government’s business to force business investment. Or spending it in ways it wants, even under the guise of avoiding a so-called “quarterly capitalism.” As for the government picking winners and losers as Hillary suggested with her gushing comments on “investing” in wind and solar, it can get even worse if the government somehow takes a de-facto seat on every board of directors.

Of course, this kind of crony capitalism is the real killer of jobs and innovation by punishing effective industries. While pouring gobs of money into those who do not generate any jobs; “quarterly capitalism” is not the worst thing in the world, and boards of directors should fight it; however, Hillary is looking to be the arbiter of good and bad investments while spending taxpayer money on boondoggles.

Deja Vu All Over Again

Then, there’s the Export – Import (Ex-Im) Bank. It was created on February 2, 1934 by FDR to make loans to the Soviet Union. These days, we are told it is designed to help small businesses. In fact, the fattest and richest companies in America get to feed at this trough. The bank even lends money to foreign companies who compete against domestic companies.

Government officials, including Barack Obama and Hillary Clinton say the Ex-Im Bank helps minority and women businesses….but the fact is that their share of the pot is infinitesimal.


Sumnmertime Blues

Moreover, there is not panic, but it is obvious the market is in trouble. It does not make it the end of the road, but it is a legitimate time to ask if it is the end of the bull. I do not think the Bull Run is over, but it has been due for a real test and this is shaping up to be one, not unlike last October. There’s not anything new other than doldrums and angst over the would-be catalyst. Essentially, the market is sideways for the year and it feels worse; beneath the surface, it is a lot worse.

It’s clear the Dow under 17,500 on a closing basis could trigger more selling.

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