Tuesday Talk: April Is The Cruelest Month?

At least that is what the poet T.S. Eliot wrote in the opening line of his well-known poem, “The Wasteland”. With all the chatter about an April correction it might be, but traditionally April is one of the strongest months for the stock market. Image via Scarsdale Public LibraryOn Monday the S&P 500 closed at 5,244, down 11 points, the Dow closed at 39,567, down 240 points and the Nasdaq Composite closed at 16,397, up 17 points.Chart: The New York TimesMost actives were led by Tesla (TSLA), -0.3%, followed by Advanced Micro Devices (ADM), +1.6% and Micron Technology (MU), +5.5%Chart: The New York TimesCurrently in morning futures trading, S&P 500 market futures are trading down 21 points, Dow market futures are trading down 214 points and Nasdaq 100 are trading down 95 points.Talkmarkets contributor  Lance Roberts says Market Corrections Matter More Than You Think.”There are some essential facts about markets that should be understood. First, indeed, stocks rise more often than they fall. Historically speaking, the stock market increases about 73% of the time. The other 27% of the time, market corrections are reversing the excesses of the previous advance. The table below shows the dispersion of returns over time.However, fairly substantial corrections have not been uncommon in those positive return years. As shown in the table below, intra-year corrections, which average roughly 10%, are common.…There is a massive difference between AVERAGE and ACTUAL returns on invested capital. Thus, in any given year, the impact of losses destroys the annualized “compounding” effect of money.The chart below shows the difference between “actual” investment returns and “average” returns over time. See the problem? The purple-shaded area and the market price graph show “average” returns of 7% annually. However, the return gap in “actual returns,” due to periods of capital destruction, is quite significant.…during excessively high valuations, investors should consider opting for more “active” strategies with a goal of capital preservation.As Vitaliy Katsenelson once wrote:

“Our goal is to win a war, and to do that we may need to lose a few battles in the interim. Yes, we want to make money, but it is even more important not to lose it.”

I agree with that statement, so we remain invested but hedged within our portfolios.Unfortunately, most investors do not understand market dynamics and how prices are “ultimately bound by the laws of physics.” While prices can certainly seem to defy the law of gravity in the short term, the subsequent reversion from extremes has repeatedly led to catastrophic losses for investors who disregard the risk.Just remember, in the market, there is no such thing as “bulls” or “bears.” There are only those who “succeed” in reaching their investing goals and those who “fail.” “This is an excellent piece which I suggest you read in its entirety. I have included just a smidgen above.PixabayIn an in the spotlight piece, contributor Gregor Horvat writes that Bitcoin Is Still In A Higher Degree Correction.”Bitcoin (BITCOMP) is trading in strong five-wave bullish trend as expected and the trend may resume after a corrective slow down. After we spotted a completed wave (5) of 3 in the 4-hour chart, we are still tracking a higher degree wave 4 correction. It just turned out to be more complex, either as a bullish triangle or alternatively deeper flat pattern. So, as soon as wave 4 correction fully unfolds, be aware of a bullish resumption into wave 5 of III towards 75k – 80k area.”TM contributor Ironman brings readers the latest data for Median Household Income In February 2024.”According to Motio Research, median household income dipped in February 2024. The firm’s estimate of February 2024’s median household income is $77,265, a small decrease of $132 (-0.2%) from the firm’s initial estimate of $77,397 for January 2024…The following screenshot of Motio Research’s Motio Research shows how this index has changed from January 2010 through February 2024:In our view, the small decline in February 2024’s median household income estimate is not sufficient to break the uptrend shown for this index since May 2023…Our initial estimate of median household income in February 2024 using our alternate methodology is $77,508, which is $225 (+0.3%) higher than our $77,397 for January 2024. Our February 2024 estimate is $243 above Motio Research’s initial estimate for the month.The latest update to Political Calculations’ chart tracking Median Household Income in the 21st Century shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through February 2024. The inflation-adjusted figures are presented in terms of constant January 2024 U.S. dollars.Focusing on the blue, inflation-adjusted data in the chart, we find the purchasing power of the $77,508 income earned by the typical American household in February 2024 is 3.2% below its level in February 2020 when our inflation-adjusted median household income stood at $80,102 in terms of constant February 2024 dollars. This percentage represents the net purchasing power the typical American household has lost during the past four years, nearly all of which has taken place since the end of 2020.”Hmmm…indeed.Wondering how small-caps fared in Q1?TalkMarkets contributor Wajeeh Khan racks and stacks them in Russell 2000 Index Best And Worst Performing Stocks Of 2024.

The Russell 2000 index continued to underperform the Dow Jones and Nasdaq 100 indices in the first quarter of 2024. The closely-watched iShares Russell 2000 ETF (IWM) rose by about 5% in Q1 while the Invesco QQQ and SPDR SPY ETFs jumped by more than 10%. Small-cap companies have struggled in the era of high-interest rates. The Fed has pushed rates to a two-decade high of between 5.25% and 5.50%…The best-performing companies in the Russell 2000 index in Q1’24 were Ocean Biomedical (OCEA), Viking Therapeutics (VKTX), Janux Therapeutics, Longboard Pharmaceuticals, and Avidity Biotherapeutics. As we have written before, Viking Therapeutics jumped sharply because of its weight loss drug.The other notable gainers in the Russell 2000 index were MicroStrategy, Veritone, Soundhound AI (SOUN), Li-Cycle, Carvana (CVNA), and Oscar Health (OSCR). MicroStrategy’s share price has jumped by 160% this year because of its huge Bitcoin holdings. Soundhound shares surged as demand for artificial intelligence companies rose and after Nvidia made a huge investment in it. Veritone stock also soared because it transitioned to artificial intelligence.”For more stats including IWM laggards see the full article. Contributor Yashwardhan Jain suggests readers Embrace ETFs To Capture India’s Momentum Growth.Here are the picks.”iShares MSCI India ETF (INDA – Free Report)iShares MSCI India ETF seeks to track the performance of the MSCI India Index with a basket of 136 securities. The fund has amassed an asset base of $8.89 billion and charges an annual fee of 0.65%.iShares MSCI India ETF has major exposure to financials (24.82%), followed by consumer discretionary (12.71%), information technology (11.93%) and energy (11.12%) sectors. The fund has gained 31.68% over the past year and 11.46% over the past three months. WisdomTree India Earnings Fund (EPI – Free Report)WisdomTree India Earnings Fund seeks to track the performance of the WisdomTree India Earnings Index with a basket of 476 securities. The fund has gathered an asset base of $2.81 billion and charges an annual fee of 0.85%.WisdomTree India Earnings Fund has major exposure to financials (22.62%), followed by the energy (18.25%), materials (12.53%) and information technology (11.88%) sectors. The fund has gained 40.22% over the past year and 14.59% over the past three months. iShares India 50 ETF (INDY – Free Report)iShares India 50 ETF seeks to track the performance of the Nifty 50 Index with a basket of 50 securities. The fund has gathered an asset base of $854.5 million and charges an annual fee of 0.89%.iShares India 50 ETF has major exposure to financials (32.84%), followed by information technology (13.27%), energy (12.78%) and consumer discretionary (9.01%) sectors. The fund has gained 22.99% over the past year and 8.24% over the past three months. Franklin FTSE India ETF (FLIN – Free Report)Franklin FTSE India ETF seeks to track the performance of the FTSE India Capped Index with a basket of 228 securities. The fund has amassed an asset base of $864.6 million and charges an annual fee of 0.19%.Franklin FTSE India ETF has major exposure to finance (24.08%), followed by the technology services (11.86%), energy minerals (10.96%) and consumer durables (8.03%) sectors. The fund has gained 34.60% over the past year and 12.07% over the past three months. iShares MSCI India Small-Cap ETF (SMIN – Free Report)iShares MSCI India Small-Cap ETF seeks to track the performance of the MSCI India Small Cap Index with a basket of 490 securities. The fund has gathered an asset base of $726 million and charges an annual fee of 0.79%.iShares MSCI India Small-Cap ETFhas major exposure to industrials (22.01s%), followed by the financials (17.36%), materials (14.87%) and consumer discretionary (13.98%) sectors. The fund has gained 45.22% over the past year and 9.03% over the past three months.”As always, caveat emptor.Closing out the column this Tuesday, contributor and economist Menzie Chinn finds 2023Q4 GDP Advances In All 50 States; Real Personal Income Declines In 5. Below are some of the charts, there are more in the complete article.”Nominal personal income rose in all states.Nominal personal income rose in all states.”Have a good week.Peace. More By This Author:Tuesday Talk: Big-Tech Under Attack
Thoughts For Thursday: The Fed Is In The House
Tuesday Talk: Still Talk Of The Town – Inflation