Mailbag: The Markets, the Midterms… and Why Good Stocks Are Falling

Andy Snyder|November 7, 2022

Jeepers, Mr. Wilson… we feel like a devilish little boy shooting our slingshot at the old man’s prized tomatoes.

Or are we David, whipping pebbles at Goliath?

Either way, we tossed some stones last week that had some folks reaching for their heart pills… and others ready to hitch up a horse and buggy and turn Amish.

Giddyup, old pal!

The advice your fellow readers are giving us… Don’t stop.

“Keep the mailbag open,” one reader wrote.

“Thank you for saying out loud what so many of us are thinking! Great job!” wrote another.

With so much fun to be had… how about we do it again?

From the mailbag…

Do the markets care about the midterm elections? – Reader J.B.

Well, do you care about the midterms? Do you think we’re in for any big surprises?

It sounds like a snarky response. Perhaps it is. (We’ve been told that we’ve gotten a bit more “straightforward” in our older age… that our “social IQ” has waned. That’s dumb.)

But it’s a good reminder that the stock market is made up of people. That’s especially true right now, as retail investors are dominating market flow… and mucking everything up.

Understanding investor psychology is important. Often, it’s everything.

Most folks don’t think the midterms will change what comes out of Washington all that much. It’s not like those bozos have gotten anything done… and the man with the executive pen is still in charge.

Win, lose or draw tomorrow, the stock market may burp… but it’ll digest the news of the day just fine.

Chaos in the land of the brain-dead is nothing new.

Next…

First off, I loved your recent column on subsidies for the oil and gas industry and about how the dollar is far from worthless. I also liked the quote about wisdom from Francis Bacon. I put notes in my sons’ lunchboxes every morning, often with quotes from great men of the past. This will do nicely.

Anyway, my question is this: Many stocks have fallen quite a lot this year. One I’ve been looking at is VF Corporation (VFC). For the life of me, I can’t figure out why it’s fallen so hard. It’s not a tech stock, it’s not some fly-by-night con that’s never turned a profit. It wasn’t born in the metaverse or conceived by a SPAC. It’s been around for decades. And yet it has fallen from almost $75 a share on January 2 to under $29 now. 

Seriously, what gives? – Reader P.L.

Great question. But we have to look at more than just VFC. The bigger question here is, why have good stocks fallen?

It’s like we’ve said so many times before… Money goes where money is treated best.

Despite some Herculean efforts by the dopes in charge, there’s only so much money out there. Like the oceans tracking the moon, the tide of cash will go wherever the pull is greatest.

For more than a decade, we were lucky to get 0.5% in a high-yield savings account. Today, we can get close to 4%.

That’s guaranteed money. Fixed. No chance of a deep sell-off… a taper tantrum… any of that stuff.

VFC and so many other builder-grade stocks just proved they can’t compete with that risk-free income. They may move up and down an average of 8% or so… but those downs really hurt.

All it took was a few percent of conservative buyers to move into safer assets for us to get what we’ve gotten – more “asks” than “bids.”

Again, money goes where it’s treated best. Once the balance tips in the other direction – once VFC, et al. are clear and obvious bargains – the rush will be on.

How will you know?

When you feel like buying would be crazy stupid… that’s the time to get in.

One more since we’re having fun…

Great article [about the Amish living well below the poverty level]. Now let’s hear how the Amish are able to do that. – Reader J.G.

This is the easiest one yet. Anybody can do what they do. It’s through sacrifice, a strong set of rigid values and a community that holds each other accountable – three simple but rare ideas.

You want to know how we’re voting tomorrow? Start with those principles.

Keep the questions and comments coming. Send them to mailbag@manwardpress.com.

Note: Speaking of voting… We’re kicking off our presidential campaign right after the midterms. And this time, darn it, we won’t forget to fill out the paperwork.