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I live in a world of macro and fundamentals. The basic reason for this is that I can’t think of a situation where they didn’t inform me of the future. Together, macro and fundamentals can tell us quite a lot about longer term stock market potential.

There are two basic ways to invest in the market. You can either stick your finger in the air and invest however the wind is blowing or you can have a process, a lens through which to view a broader spectrum of factors to invest assets. It seems obvious to me which way makes the most sense, but almost any lens has weak spots.

Stocks for the Long Run by Jeremy Siegel, first published in 1994, is broadly considered one of the best investment books of all time. As the title implies, the idea is that in the long term, stocks win for compounding wealth. That has certainly broadly been the case, but even Siegel admits that there are limits to the idea.

After such a long economic expansion since 2009, and after the stock market has moved up so much, where should we invest for the long run? Is it safe to invest now, sleep for 10 years, and pocket the profits?

We’ve certainly had a rip-roaring start to the year. The first question is, is that deserved?
What happened to create this great start?

Around Christmas, when the market was down about 19% from its September 2018 peak, I wrote a blog urging people not to participate in the market panic that was going on at the time. Was that good advice?

Panic seems to be the keyword of the day for investors. As an example, CNN’s Fear and Greed index just hit 5, its all-time Fear extreme. The worst time to panic is after other people have already panicked. People who panic tend to do dumb things. “I want out. Sell everything.” To follow that herd behavior is even dumber.

Paper Sun was the debut song of the band Traffic in 1967. I happened to hear it when I was getting coffee a few days ago, and it made me think of the market. I’d say the song is about believing something is true when it’s not, and reality comes crashing down eventually. The sun is something that effectively lasts forever. How long will a paper sun last? It may look pretty for a while, but if there’s nothing really there, it will lack permanence.

When we bought retail stocks in 2017 it was a deeply unpopular trade. Nobody wanted them, as apparently Amazon (AMZN) was going to take over the retail sector all by itself. There were certainly days early in the process that weren’t much fun.

“Mr. Market” is the idea that Benjamin Graham presented in his classic book The Intelligent Investor. The idea is that Mr. Market is a hypothetical investor who is driven by emotion. Right now it seems to me that Mr. Market is fat and happy after several years of success. That has left him very comfortable.

In early 2000, tech (along with media and telecom) stocks could do no wrong. They were one decision stocks that took the whole market up with them… until they didn’t as 2000 continued. Reality has a nasty habit of intervening.

Now, once again tech is the safety blanket of choice. Financials and industrials not working out like you hoped? That’s OK, tech will never hurt you. At least not the biggest ones… mostly.

One trend I’ve noticed is that the tech stocks seem to do great as long as…