France’s first round of voting — Sunday — appears to loom over the market this morning. In a nutshell, the legit contenders consist of one candidate who is, frankly, nuts, another who appears to be a Kremlin crony (leave the Euro, anti-NATO, pro-Moscow, campaign funded by loan from Russian bank, and — unlike her competition — has been left alone by alleged Russian hacking attempts and “fake news” stories galore) and two relative mainstreamers. Either of the former two taking the first round would likely have European and U.S. markets flashing red at the open come Monday morning. Either of the latter two could have markets in rally mode. Odds makers see Macron (a mainstreamer) the ultimate (involves two rounds) winner, but recent history, to put it mildly, has not been kind to the odds makers.

That’s all I have to offer on France for now. Possibly more next week depending on Sunday’s outcome.

A personal story:

Growing up, duck hunting and trout fishing were my things — the latter still is. As it happens, football season and duck season coincide each year. So, back in the mid-70s, every Friday night after playing for the legendary Kerman High Lions — rather than doing whatever high school football players did on Friday nights — I’d hop into my oldest brother’s heavily-speakered VW Beatle (Dad called it a stereo on wheels) and we’d head out to the Mendota Wildlife Preserve (rockin the whole way to Aerosmith, Neil Young and Ronny Montrose on the 8-track) to get in line with all the other crazies. We’d sleep in the car till 4 a.m. then, after flashing our hunting licenses and paying our ten bucks each at the booth, we’d race to whatever flooded field had been working for us the prior weeks, or to one we had noticed the week before was attracting more birds.

Upon exiting the preserve the warden who’d check our numbers would, upon request, tell us the count per head so far that day. We took great pride in the fact that, for whatever reason, Paul and I seemed to almost always beat the average. Being the humble bloke I be, I often wondered how we so consistently — on average — bested the other hunters. I mean, we were decent shots, but nothing extraordinary. All we did was set up in the fields the birds were “working”; arranging our decoys in the patterns — based on wind-direction and terrain — that generally seemed to work for us. We indeed had our poor hunts every now and again; times when the birds just weren’t visiting the same fields they did the week before (perhaps a storm blew through and pushed the prior week’s birds further south, while new arrivals frequented other haunts. Or, as was often the case, the pressure from too many opportunistic hunters ultimately ruined the opportunity). In some instances — in the middle of a hunt — we’d notice a stronger trend developing in another field; we’d watch for awhile, and once we were convinced it was for real (that birds en masse would continue using that area), we’d collect our decoys and slog our way over to those more productive pastures. Essentially, my brother and I were trend-following duck hunters.

Circa 1986, me and two buddies decided to hike from Kaiser Creek to Mammoth Pools in the Central Sierra Mountains. The sign at the trail head said it’d be 4 miles. I gotta tell ya, that was the longest 4-mile hike! I swear, some sadistic s.o.b. had to have scratched off the “1” that once preceded the 4, but that’s another story. Half-dead, as we trekked back to the top — by way of the middle of Kaiser Creek (we would actually fish each pocket then swim through it and scale our way to the next) — we came to a good-sized pool that filled one of the rare large flat spots in that insane terrain. To make a long story short, that particular pool happened to be home to an army of very hungry, and inexperienced (i.e., having rarely, if ever, encountered fishermen) rainbow trout.

To my pals and me everything was a competition; so we counted every fish we caught. Believe it or not, that one spot yielded exactly 45 trout (catch and release of course) that afternoon. I think I caught 43 and my buddies each caught 1. Oh, wait, I’m humble, uh… can’t recall who caught the most. In essence, we found the mother lode and wouldn’t leave till the fish stopped biting — upon which we swam through the no-longer hot spot and climbed up to the next hole, then the next, until we found another area with crazy-hungry fish. In other words, my buddies and I stayed with the trend to the end, then went in search of the next. Yep, trend-following fishermen we were!

Each week I illustrate for you, via video, the whys and wherefores of what we do here at PWA. As you’ve noticed, I’m forever pointing out trends, be they market or economic. It’s been our experience that — like trends in ducks and fish (until impacted by changing weather or sheer exhaustion); like the flight of cleanly struck golf balls and baseballs (until subdued by wind resistance, gravity or an opponent’s glove); like cars entering freeways (until choked by congestion or until a destination is reached); and like the Golden State Warriors (until meeting the Cleveland Cavaliers in the finals) –trends in markets, notwithstanding numerous short-term diversions, continue until some greater force gets in their way.

Okay, you say, but wouldn’t it be better to anticipate a trend and take a position before it gets going? Well of course, that would be the ultimate! Problem is, accurately forecasting the next trend, before it begins, would require a sixth sense that somehow knows of yet to be made decisions; i.e., knows what deciders will decide before they themselves have decided (remember, markets move only on the decisions of people). My brother and I wouldn’t place our decoys in a field that hadn’t signaled that doing so offered us decent odds of success, which required a message from the ducks themselves. My buddies and I believed the fish were there and we figured that few fishermen would endure what it would take to reach those untutored trout. Thus, we knew that the probabilities favored an existing trend that had Kaiser Creek rainbows devouring anything that moved. Had the fish not been biting we’d have simply chalked up the lost time (and the lost fly/lure or two) to experience and gone in search of a pool with a positive trend.

Again, markets move only on the decisions of people! Please, ingrain that into your consciousness. Own it! For, when you understand that essential truth — like you understand how you could not have predicted that your spouse would wake up on the wrong side of the bed this morning, thus influencing his/her decisions for the day — you understand that NO ONE can accurately and consistently predict markets! And no, by the way, paragraph one was not a prediction (recall I wrote appears to, would likely and could have); it was simply me assessing probabilities (like the fishing odds at Kaiser Creek).

So now, PLEASE, when you hear the bloke a half-hour before today’s market close telling you how good the fishing will be in X market or stock, or how bad it’ll be in Y, understand that if he really knew (which he can’t) he’d be fishing, not talking. Truth be told, he already cast his line, and you’re the fish. If you bite, he wins!

Have a great weekend!
Marty

P.s. If you enjoyed the above, you might like this one. Here’s a snippet:

So does the knowing of the factors that would impact a fishing outing or a round of golf guarantee us success in either instance? Of course not, many of those factors are beyond our influence, let alone our control. So is there anything that we can influence that might improve our odds? Absolutely there is! You might call it the process, or the discipline; the manner, that is, in which we approach the stream or the tee. Or you may prefer to think of it as rhythm: the bringing together of the things we’ve learned and the things we know intuitively, and acting smoothly and consistently on those knowings – even when the elements conspire to yield us the periodic, and inevitable, less than desirable result.  In essence, we know that every trip to the river, and every round of golf, will certainly not deliver “success”, by society’s standards, yet we know that if we remain consistent, perhaps tweak a little something every now and again, if we remain relaxed and in the flow, our overall odds of success – be it per outing or in the aggregate over a number of years – increase exponentially.