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Topley’s Top Ten – October 3, 2019
Matt Topley
October 03, 2019
1.Micro-Caps Barely Up for the Year After Yesterday.
Micro Cap ETF IWC YTD. …Still -20% from Highs.
2.Two-Year Treasury Yields Heading to New Low….Near 2017 Levels.
3.October Seasonality…Some Famous Drops but Over the Last 20 Years Third Best Month for U.S. Stocks.
As shown in the LPL Chart of the Day, Octoberhas quietly been one of the strongest months of the year over the past 10 and20 years. Going back to 1950, it ranks as the seventh strongest month of theyear, so right near the middle of the pack.
Four other things to consider:
Since 1950, no monthhas had more 1% moves (higher or lower) than October.
Since 1928, 6 of the10 worst single-day drops have taken place in October; however, 3 of the 10best days ever occurred in October as well.
This is apre-election year, and as the chart above shows, October’s average returns in apre-election year have been muted since 1950. The catch here is that thisaverage return is greatly impacted by the 21.8% drop in 1987. The median returnis actually quite respectable.
October has beenhigher during a pre-election year every year since 1999, with an average returnof an impressive 6.5%.
4.Construction Payroll Employment Hits 2008 Highs…Tough to Go Any Higher With Unemployment 4%
FRED CHARTS
5.European Buybacks Pickup….U.S. Buybacks Declining.
Bloggersnote we need that Buyback bid later this month to come to the rescue ofthe tape
From Dave Lutz at JonesTrading
6.Growth Rolls Over Hard—Financial Conditions Most Accommodative in 5 Years
Anexpected dovish pivot by central banks has materialized. Now what? Financialconditions in key developed economies have become more accommodative as aresult, even though the lift to the broader economy has yet to kick in. We seepolicy easing helping sustain the economic expansion–and the likelihood of agrowth pickup over the next six to 12 months. This supports our moderatepro-risk stance. Yet it could be a bumpy ride due to the persistent uncertaintyfrom protectionist policies.
A growth recovery looming ahead- ElgaBartsch, PhD
7. $300 Billion Investment in Electric Vehicles.
A Reuters analysis of 29 global automakers found that they are investing at least $300 billionin electric vehicles, with more than 45 percent of that earmarked for China.
By Paul Lienert and ChristineChan
8.U.S. Slaps $7.5B in New Tariffs on Europe.
FrancisScialabba-Morning Brew
MORNING BREW
9.One Third of Americans are Innumerate.
How math skills plus confidence equals better judgment on health,money
By Ellen Peters and BrittanyShoots-Reinhard
September 29, 2019 at 2:00 p.m. EDT
Almosta third of American adults don’t have the mathskills necessary to make effective decisions about their healthand finances.
These73 million people can count, sort and do simple arithmetic. But they probablycannot select the health plan with thelowest cost based on annual premiums and deductibles, or figureout that they can’t pay off credit card debt basedon the amount they owe, minimum monthly payments and an annual percentage rate.
Theyare innumerate, meaning they’re unskilled with numbers. Numerate people, incontrast, are mathematically proficient.
In our research aspsychologists, we measure numeracy with a math test. If you can answer thefollowing question correctly, your response falls in the top half of well-educated Americans, and youare highly numerate:
“Outof 1,000 people in a small town, 500 are members of a choir. Out of these 500members in the choir, 100 are men. Out of the 500 inhabitants that are not inthe choir, 300 are men. What is the probability that a randomly drawn man is amember of the choir?” (The answer is at the end of this report.)
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Peoplewho are better at answering these kinds of math questions make decisionsdifferently from those who struggle with them. The highlynumerate search for and think hard about numberswhen they make decisions. Ultimately, they trust numbers more andhave a clearer understanding of what the numbers mean for their decisions.
Theless numerate, however, rely more on compelling stories and emotional reactions indecisions rather than the hard facts. They tend to make worse decisions forthemselves when numbers are involved.
Beingnumerate doesn’t guarantee you’ll use numbers well in decisions, though.Confidence matters, too. We measure numericconfidence with questions such as “How good are you at workingwith fractions?” More numerically confident people stick longer with eventedious or difficult mathematical tasks. For best outcomes, you need to usenumbers correctly, and you need to persist when the going gets tough. That is,you need to be numerate and you need to be numerically confident.
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But our new research suggests thatmore is not always better when it comes to number skills and number confidence.Instead, having a good understanding of your ability — a match between abilityand confidence — is critical.
Toinvestigate this connection between math ability and confidence, we carried outtwo separate studies.
Inone, we measured 13 self-reported good financial outcomes among 4,572 Americans— things such as not having high credit card debt or a payday loan. Out of our13 possible financial outcome scenarios, we then counted up how many goodoutcomes each person experienced.
Inthe second, we collected data on physician-reported disease activity among 91lupus patients. Less disease activity — for example, better medical testresults or fewer new rashes — means a healthier patient.
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Wesaw the best financial and health outcomes in those with high numeracy and highnumeric confidence. “Mismatched” individuals — with either high ability and lowconfidence, or low ability and high confidence — experienced the worstoutcomes.
Andthe effects were not small.
Read Full Story
Found at Abnormal Returns www.abnormalreturns.com
10.I Use This 5-Minute Therapy Technique Every Day for My Anxiety
First,you have to understand what type of cognitive distortion is occurring.
By
Courtesyof Tatiana Dyuvbanova / EyeEm / Getty Images
I’ve lived with generalanxiety for as far back as my memory goes. As a writer and stand-up comedian, Ihave the most trouble fighting against social and performance anxiety on aday-to-day basis, as I conduct interviews and interact with editors during theday and then take the stage at night.
My anxiety most often showsitself in what I call “anxiety hangovers,” when I wake up on the day followinga social event or meeting or comedy show feeling horrible about everything Idid or said — no matter how fun or successful the event felt the night before.
Everyone thinks you’re egotistical andobnoxious, my inner voice spits at me when I wake up.
You said the exact wrong thing to your friendwhen she asked for your opinion, because you never think before you open yourmouth.
You dominated the dinner conversation. Nowonder no one likes you.
You were so embarrassing on stage, of courseyou aren’t a success.
The mean little voice goes onand on and on.
After big events, like afriend’s wedding or important comedy show, I’ve had panic attacks the followingmorning: a racing heart, trembling hands, and trouble breathing. On other days,I just can’t concentrate because of the worry and feel mentally paralyzed, andthe confidence I need to do my work is sunk.
Where cognitivebehavioral therapy comes in
The central idea behindcognitive behavioral therapy (CBT) is extremely simple: If you change the wayyou think, you can change the way you feel.
But if feeling better andescaping depression and anxiety were that easy, we wouldn’t live in a countrywhere psychological distress is increasing.
While I’ve found that I can’tfully eliminate or “cure” my anxiety (and probably never will), I’ve found asimple five-minute CBT exercise that quiets it down each day. My racingthoughts stop, my foggy brain begins to clear, and my fatigue lifts.
Suddenly, I feel like I canstart my day.
Called the triple columntechnique, which was developed and named by clinical psychiatrist Dr. David D. Burns,all it does is change my mindset. But sometimes, this shift is enough tocompletely shut my anxiety up for the day. A change in how we think aboutourselves is all we really need to find a calmer, happier place.
Recognizingcognitive distortions
In 2014, a friend recommendedBurns’ “FeelingGood,” a CBT classic that takes readers step-by-step throughrecognizing negative self-talk, analyzing it rationally, and replacing it withhealthier and more accurate thinking.
(Burns also suggests, formany people living with anxiety and depression, to see their doctor and pairtherapy and the appropriate medication if deemed necessary.)
The book made it crystalclear that I wasn’t a secretly bad person and incredible failure who can’t doanything right. I’m just a pretty regular person who has a brain that candistort reality and cause way too much anxiety, stress, and depression.
The first big lesson was tolearn the specifics of cognitive distortions — those statements that the littlevoice makes about who I am and what’s going on in my life.
There are10 big distortions that can occur:
All or nothing thinking. When you see thingsin black and white instead of in shades of gray. Example: I’m a bad person.
Overgeneralization. When you extend anegative thought so it reaches even further. Example: I never do anything right.
Mental filter. When you filter outall the good stuff to focus on the bad. Example: I didn’t accomplish anything today.
Disqualifying thepositive. When you believe a good or positive thing “doesn’t count” towardyour larger pattern of failure and negativity. Example: I guess I survived the talk — even broken clocks are right twice aday.
Jumping to conclusions. When you extrapolatean even bigger and broader negative thought from a small negative experience.Example: He said he didn’t want to go out with me. I must be an unlovableperson.
Magnification orminimization. When you exaggerate your own mistakes (or other people’saccomplishments or happiness) while minimizing your own accomplishments andothers’ flaws. Example: Everyone saw me mess up at thegame, while Susan had a perfect night on the field.
Emotional reasoning. When you assume yournegative feelings reflect the truth. Example: I felt embarrassed, therefore Imust have been acting in an embarrassing manner.
Should statements. When you beatyourself up for not doing things differently. Example: I should’ve kept my mouth shut.
Labeling and mislabeling. When you use a smallnegative event or feeling to give yourself a huge, general label.Example: I forgot to do the report. I’m a total idiot.
Personalization. When you make thingspersonal that aren’t. Example: The dinner party was badbecause I was there.
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