What a crazy week on Wall Street

“The more things change, the more they stay the same”  –Jean-Baptiste Alphonse Karr

Stocks have taken a really wild ride lately.  Starting last Thursday, they had a free fall down 10%, then they recovered about 6% of that.  Things finally settled down on Friday when the market finished virtually unchanged.

SP500 graph

There was actually a streak of 6 days where stocks moved at least 1%.  Generally speaking a 1% move is pretty big (in this market it’s about 170 points on the Dow).  To have that happen 6 days in a row seemed pretty extraordinary.  More than the steep drops, I think it was the relentless “huge” moves everyday that particularly put my nerves on edge.  I think I can better handle just a crazy day and then accept that it’s over.  Kind of like an earthquake in Southern California; it’s violent and scary, but it just lasts a couple seconds, then it’s over and you know you need to start getting on the business of recovery.

So I wanted to ask two questions:


How often does the market move 1% for so many days in a row?

Before this streak of 6 days in a row, the next longest streak in 2015 was for 3 days.  The longest streak in 2014 was 5 days, the longest streak in 2013 was only 3 days, and the longest streak in 2012 was 2 days.  So that starts to tell me that a 6 day streak is not all that common.

In fact, you have to go back to 2009 and the aftermath of the Great Recession to have a streak of 6 days.  However, that was the tip of the iceberg.  During that time there was also a streak of 8 days, another of 7 days, and two separate streaks of 10 days in a row where the market moved at least 1%.

I think that puts what we just went through in perspective, both for the good and the bad.  First, what we went through was a pretty big deal. Crazy weeks like that don’t really happen all that often, and you survived it so congratulate yourself.

That said, compared to the Great Recession, this was just a small blip.  And that feels right.  During the depths of the Great Recession, people were actively questioning the viability of capitalism and the stock market, and there was a real sense of capitulation.  Those days have left deep scars for many, a lot of whom have sworn off stocks just because that was such a tough time for investors.

I never felt anything close to that during this roller coaster.  When things were falling, sure it sucked, but I sensed that most people were looking at it as a blip that would prove a good buying opportunity (as turned out to be the case).  Sure, it was frustrating when we finished one bad day and then follow that up with another bad day, but again it never seemed people were losing faith.

Put all that together, and I’ll call this a class 2 hurricane.  It caused damage and but no lives were lost.  We’ll forget this in a few months.  That’s very different from a class 4 hurricane (Great Recession) or class 5 (Great Depression).


Has the market gotten more volatile in recent years?

The other thing that occurred to me was is all this market volatility increasing.  You hear people talking all the time about how the market is changing, typically for the worse.  I don’t buy a lot of those arguments, but I do believe that the market is changing in undeniable ways—computers are driving more trades, investing is becoming an international game, investors are getting savvier, information travels much more quickly, and you could go on and on.

I pulled data on the S&P 500 going back to 1950 when the index began.  I counted the number of days where the market moved at least 1%, and I was fairly surprised by the results:

Up 1%

Down 1%























Looking at the data a few things stand out.  First, there seemed to be a big change around 1970.  Before that about 10-13% of the trading days had big moves.  But since the 1970s, those days jumped up drastically to at least 20%.  I tried to think what would have caused this stark change and I couldn’t come up with anything.  Sure, the world has changed drastically since the 1950s, but was the change from the 1960s to the 1970s any greater than, let’s say, the 1990s to the 2000s?  I don’t think so, but something happened.  The data’s definitely there.

Second, the 2000s were the most volatile decade in this data set.  If you look back then, that makes sense.  The decade was bookended by two disastrous periods for investors—the tech bubble popping in 2000 and the Great Recession in 2008.  Both periods put stocks in an absolute frenzy, diving one day then freighting a recovery the next.  I’m not old enough to have lived through the Great Depression or the lost decade of the 1970s, but I did feel I cut my teeth in the 2000s.  I suppose in a perverse way, it’s comforting to know how crazy of a time that decade proved to be.

Finally, and most topical, is that the 2010s, so far are a pretty average decade as far as volatility goes.  Sure you had the past week and a half which was a whirlwind, but as we saw at the top of this post, the previous years were pretty calm.  This decade compares pretty favorably to the 1990s, 1980s, and 1970s.

I think it’s important to put this in perspective and somewhat debunk all the doomsdayers who tell us that things are so different.  The opening quote, “the more things change, the more they stay the same,” which to further prove it’s point was first coined in the early 1800s, seems to prove its wisdom.  Sure we can get caught up in all the craziness of the past few days, and that’s okay.  But let’s not lose sight of the fact that this is just the way the stock market is and has been for a very long time.


* 2010s are through 28-Aug-2015.

Project Runway should SHOWCASE women of all shapes and sizes

 Please share this if you believe that Project Runway should celebrate women of all shapes and sizes and ages.  My hope is enough people share this that it ultimately gets to Heidi Klum and the people at Lifetime Television.  Maybe if they know their fans and viewers want to see a variety of women models, they’ll make the change.  I hope you join me in this.


If you ever want to know where to find Foxy Lady and me on Thursday nights, it’s in front of the television watching our favorite show, Project Runway.  We have been longtime devotees; we started watching the show together during its 4th season when we were dating in Chicago.

She loves it for the fashion.  I am man enough to admit I love it too, mostly to see the creative process take shape.  So there you go, a Project Runway lovefest.

A typical Project Runway model–super young, super tall, super thin

But there is something that has always bugged me—Project Runway still exclusively uses “model-sized” models for all its runway shows.  They’re all your stereotypical model—early 20s, 5’10”-ish and 110-ish pounds, stick-thin with super-long legs.  Of course we know that isn’t the real world.  You take 1000 women off the street and maybe 2 look like that.  The other 998?  They’re thin and short, chubby and short-waisted, tall and muscular, big-busted, big-butted, and a hundred other shapes.  Why doesn’t Project Runway let these women also be the muses for its designers?

Granted, in one or two episodes a season, they do use non-model-sized models, but those shows tend to be gimmicks.  Last season in episode 13.9 they designed clothes for kids and in the following episode (13.10) they picked models up off the street, although I must confess I don’t remember a huge diversity in the shapes and sizes of those women.  But all the other episodes use exclusively super-young,  super-tall, super-thin models.

This is a normal-sized, middle-aged woman who was a model. How did she get the gig? She was the mom of one of the designers on one of the gimmick episodes.

The season before that in episode 12.10 the designers created outfits for Project Runway superfans (sadly, I was not included among the group), and there you saw women with a lot of different shapes and sizes.  All the other episodes: you guessed it, super-young and super-tall and super-thin.

I could go on and on.  Suffice it to say, in any given season there are about 15 episodes and one or two of them use models that deviate from the super-young, super-tall, super-thin look.

pr model 1
The designers showed they could make this “real world” woman, who is a little on the heavier side, look just as fabulous as a super-young, super-thin, super-tall model.

Call to action

So here is my call to action for Lifetime and Heidi Klum.  Start using models that represent the diversity of the women in this country.

Sure, there are probably excuses that the show could use, but they’re all pretty weak:

The designers are used to working with super-young, super-tall, super-thin models:  This actually comes up a lot in those episodes where they do use normal-sized women.  The designers complain that they don’t know how to size their garment for a woman with big boobs or a big butt (Carlos from season 8 shared these sentiments to nice comic effect).  My answer—tough cookies.  Learn to make clothes for these women, after all if you want to be a successful designer, you’re going to need to.  I guarantee you that Michael Kors or Brooks Brothers (two design houses that have strong ties to Project Runway) sell more clothes that are larger than size 4 than are smaller.

It wouldn’t be fair if some designers got different sized models—the models need to be “standardized”:  I can see the logic here, but it’s something where you can either accept the excuse or not.  I choose to not accept it.  Women of any shape can be beautiful.  One of the designers’ jobs is to create the garments that bring out that beauty.  Some will need to accentuate the butt while others need to downplay it, same for the bust or the wide hips or the thick ribcage.  But isn’t that part of the challenge?

The supply of different-sized models just isn’t there:  Bullshit.  They do the shows in New York City.  If they did a casting call for models of all shapes and sizes, they would get tons (literally and figuratively) of women.

They need professional models:  Somewhat related to the above comment.  In the episodes where they have different-sized models they tend to be gimmicks (fellow designers, dog owners, designers’ mothers or sisters, superfans, women off the street, etc.) so they aren’t using professional models.  It becomes frustrating for the designers because the models start complaining about stupid stuff or start giving their opinions when it isn’t appropriate. A good example of this was in the fourth season when Christian Siriano (the eventual winner) made a prom dress for a highly opinionated and difficult high school girl (episode 4.7).    I get the frustration, and I get that you need a professional model who can keep her mouth shut, wear the clothes, strut down the runway, and highlight the garment’s best qualities.  Here’s a solution—hire professional models who are different sized.  There are thousands of them out there if you’re just willing to look.


As I said at the beginning, Foxy Lady and I are huge Project Runway fans.  And we aren’t alone—Project Runway averages about 2 million viewers per episode.  With great power comes great responsibility.  

Project Runway is uniquely positioned to make a real difference in the fashion industry and maybe society at large.  They can continue to nearly exclusively use super-young, super-tall, super-thin models.  That perpetuates the travesty that that is normal, leading to all sorts of problems especially for girls and young women like low self-esteem and eating disorders.

Super young, super tall, super thin. Actually, this woman doesn’t look healthy. Doesn’t she look like she has an eating disorder? And she is who Project Runway is showcasing?!?!

Or they can pick up the gauntlet and show that women of all sizes can be models, women of all sizes can be beautiful, women of all sizes can strut their stuff.  If it stopped there, I think it would make really interesting viewing.  The designers would be faced with an additional dimension of challenge and the runway shows would be a lot more entertaining.

But the real upside is maybe that could impact the whole fashion industry.  In a single week more people tune into Project Runway than attend all the fashion shows during fashion week.  If they can show that there is an audience for different-sized models, and even more importantly a market for them (afterall, fashion is a business), maybe that will convince Ralph Lauren or Dolce & Gabbana or Vera Wang to follow suit (literally and figuratively).  I hope they do.


If you agree please share this and let’s see if we can get it to Heidi Klum and Lifetime Television.

Top 5—Investing blunders your instincts want you to make



“You are your own worst enemy” ― Lisa KleypasLove in the Afternoon

The human brain is probably the most amazing machine/invention/feat of evolution/gift from god (put whatever superlative you want in there) in the world.  Over millions of years it evolved to allow us to outsmart saber-tooth tigers, control fire, figure out how to grow crops, organize millions of individuals, split the atom, splice genes, and on and on.  I don’t think anyone can reasonably argue that the evolution of our brain isn’t the single most important factor which has brought us to where we are as a species today.

Yet, as undeniably amazing as our brain is, the instinctual behaviors that were so important in surviving those early years as a species are terrible when it comes to investing.  Here is my list of the Top 5 ways that your instincts tend to be wrong when it comes to investing.


5. Keeping up with the Joneses: My dad told me some sage wisdom when I was growing up: “There will always be someone richer or smarter or stronger or faster than you. What you need to do is worry about doing the best you can and forget about them.”  That’s pretty great advice in general, but especially in investing.

You’re always going to meet someone who made a killing on Apple or whose portfolio has ballooned to $5 million.  First, maybe they’re full of it; investing is like fishing, where everything is exaggerated because that makes the telling of the story more fun.  Even if they aren’t exaggerating, who cares?

Investing is a “slow and steady wins the race” type of thing.  If you save money and invest it wisely doing all the things we’ve talked about, you’ll almost certainly end up with a nestegg that will meet your retirement needs.  But it’s when people start stretching themselves and try to get big wins that things go to hell.  Using a baseball analogy, in investing you win by hitting a bunch of singles while never going for the homerun.  When you see the Joneses who got lucky when their stock popped, and you get tempted to try to find the next stock that will do that instead of sticking to your index mutual funds, that’s when you get in trouble.


4. Remember the last thing you heard: Psychologically we have something called recency bias, which basically means that we put the most weight on the last thing we heard. This makes sense if you think about it when we were cavemen.  If you hear everything okay and then a few minutes later you hear there’s a fire, it’s probably a good thing to believe something is burning.

The problem with investing is that we live in 24/7 news cycle so places like CNBC have to fill hours of airtime.  One day they have a story that says Tesla is the greatest auto company ever and their stock will go through the roof.  A couple days later they have a story about how sales slowed and the stock is way overvalued.  So which is it?

Probably somewhere in the middle.  Generally, companies don’t change that much from day to day.  If Telsa stock was worth $250 yesterday why would it be worth $220 today?  Sure, sometimes there are major news events that can move the needle that much like a court ruling or a natural disaster or something, but those are much rarer than you would think based on the wild swings in sentiment that come out of the financial media.  As with #5, this is a case where you need to see past the day-to-day comments and just keep that “slow and steady” approach.


3. Sell too soon: You take the leap and buy a stock or mutual fund. And then it goes down.  Holy crap!!!  What just happened?  I screwed up and need to get out of this before I lose any more.  So you sell too soon.  Yet just a little bit ago you thought it was a good investment, so why are you selling now?

In the light of day it’s easy to see this is a mistake and your emotions are taking control from your intellect, yet it happens all the time.  This is especially true in a media environment where we’re constantly bombarded with reasons to buy and sell.  The “slow-and-steady” investor is going to ride out those storms and hold on to the investments that were good ones yesterday, knowing that they’re probably still good ones today.


3a. Hold the stock too long:  The cousin to selling stocks too soon, is holding them for too long.  I am personally guilty with this with commodities.  Over the past couple years they have taken a nosedive, down about 50%.  But I refuse to sell because I am “waiting for them to come around”.

There’s a lot of reason to think that commodities are going to continue to fall—more oil discoveries, the world economy and especially China’s is slowing down.  Of course, who knows what will really happen.  But I think psychologically, I just don’t want to sell because that will be admitting that I made a bad investment choice.  Intellectually I know I should probably move on and sell my commodities, but I just can’t do it.  Pride is something you can choke on.


2. Try to figure it out: Our brains have a pretty good track record of figuring things out—math, physics, weather, biology. Not bad.  So it’s understandable that we have this desire to figure the stock market out, and even more powerful, a belief that we can.

Yet the stock market is a different.  It is people that make the stock market go, with all their irrational behavior (like the things we’ve discussed here).  Because of that, I believe the stock market is totally unpredictable over the short term.  But many people don’t share that opinion, and they spend inordinate amounts of time trying to figure it out.

Some of it can be more simple stuff like “the stock always does better after the earnings report”.  Or it can be hard core like all the technical analysis that uses stock charts, 200-day moving averages, open options, float and volume, and a million other factors to try to tease out what will happen in the future.

I am not a believer is that stuff.  Rather, I accept that in the short term the stock market is going to act erratically but over the long term it will have a steady upward march.  So I invest in index mutual funds with every paycheck and not try to beat the system.


1. Get while the getting is good: Momentum investing is so tempting. If a stock is going up, it’s easy to imagine that it will keep going up.  If everything is going to hell like has been happening the past couple days, it’s easy to imagine things will stay bad.  Similar to the ones above, this makes sense from an evolutionary perspective.  As a caveman, if the land was giving really great harvests, it made sense to stay there and enjoy the bounty.  If panthers already ate a couple villagers, maybe it’s time to go somewhere else.  There wasn’t really this idea of riding it out or waiting for things to even out.

However, in investing balancing out the ups and down (it’s called “mean reversion”) is a tried and true concept.  When a stock is going up a lot, we know that it can’t go up forever, and at some point it will probably come down to more rational levels.  Of course we never know when that’s going to be.  In the meantime, it’s easy for our “animal spirits” to take over and want to keep riding the stock up and up.  This situation isn’t helped by the media which understandably reports on the biggest movers, reinforcing the message that “XYZ has been going up and here’s why it’s so great.”

But this is a sucker’s game.  Warren Buffet is famous for saying: “Get scared when everyone is greedy, and get greedy when everyone is scared.”  Again (notice how the same advice keeps you out of all these blunders), you can save yourself from this by just investing in broad mutual funds (instead of trying to pick individual stocks) and investing regularly (like with your 401k contributions) rather than trying to time the market.


So there you have it—my list of blunders that our hypothalamus is constantly trying to steer us towards.  And they’re tempting.  I am certainly guilt with some of these.  Yet if you know these blunders are out there, you can take steps to avoid them.  And avoiding them, even if it leads to just a 1% better return, can make a huge difference.

As cavemen, we were playing a harsh game where the cost of even a small failure was often fatal.  Decisions needed to be quick and they needed to be bold.  And you know what, that worked for us.  Look how far we have come as a species.  But all those things that allowed us to thrive as cavemen poison our investing returns.  In investing, you really need the opposite—slow and steady moves over a long period of time.


What do you think?  Are there any blunders I missed?

Down 1000, up 900, down 500

Holy Crap!!!  What a wild day today was.  I come back after two months off, and my first day back doing the blog has the market going bonkers.  I was already to publish a post on the top 5 investing blunders we make by following our instincts, but that’s just going to have to wait until Thursday, because the roller coaster that was Monday’s stock market must be addressed.


What happened?

First, let’s just appreciate the utter insanity that was the market today.  That chart for the Dow Jones Industrial Average doesn’t look like much until you realize that each of those tick marks is 250 points.

Down intraday 2015-08-24

Sunday night most people knew Monday would be a rocky day.  The Asian markets were getting bloodied, especially China’s markets (more on that in a minute).  Maybe it would be another 200-300 point down day; that would suck but we’re starting to get used to it.  But holy cow, the Dow opened and instantly fell 1000 points.  1000 POINTS!!!  Go ahead and let that sink in for a second.  When the market reopened after the September 11 terrorist attacks, it didn’t fall that much.  1000 points.

At that point all the people at CNBC were having kittens, lamenting on how the market was ready to crater.  But then things turned around like a light switch was flipped.  In 30 minutes the Dow recovered 500 points—again just wrap your head around stocks moving 500 points in 30 minutes.  Wild.

By noon the Dow had nearly recovered all its losses, all 1000 points.  The talking heads had done an about face and started back slapping on how things were fine, and then stocks steadily slid 500 points over the next two hours.  Just a wild, wild day.


What does it all mean?

I think pretty much everyone agrees we go hit by a Chinese typhoon.  China’s the #2 economy in the world, they started liberalizing their stock markets which led to a huge bubble, and now their economy is slowing which is blowing up that new stock market.  On Monday the Shanghai index was down about 10% so we should feel pretty good about things, right?

Things have been dicey for a while.  Remember on Friday the Dow was down 500 points and down 1000 points last week.  So things were already on edge.  Monday the markets had a bit of a freak out.  But how serious should we take this?

Certainly, it’s serious since the markets have lost 10% in less than a week, but I think there is a silver lining that we can see just in the path of today’s craziness.  There wasn’t a ton of news that justified the 1000 drop at the opening—it just kind of happened.  Okay, I can accept it.  But then there was no news that turned things around and recovered the 1000 points.  That just kind of happened to.  And then there was no news that brought it down again.

In a perverse way, that should be comforting.  Yeah, China’s going through some tough stuff right now, but that can’t come close to justifying a 10% drop in stocks.  It just seems like a mob on the streets going crazy, rushing from one street corner to the next, not really knowing where it’s going or why.  Eventually those mobs just lose steam and disperse.  That’s what I think will happen here.

Dow Oct 2014

Will it recover in a few weeks like the swoon in October of 2014?  Remember that one?  Probably not because it was just a hiccup.  But over the course of a week stocks fell 1000 points and everyone was freaking out, but then a week later all those losses were recovered and the world was okay again.  Maybe it will happen like that, or maybe it will be a longer grind like after the 2000 internet bubble.


What are you doing to do?

This is going to shock you, but I’m not really doing anything.  I’ll keep plugging away with my buy and hold strategy using dollar cost averaging.  In the meantime, I’m enjoying the craziness for its entertainment value.

Wait a second.  That’s not entirely true.  Foxy Lady and I are buying a house in Greensboro.  Since our Los Angeles house hasn’t sold yet, we’ve had to sell some stock for the down payment.  I look at it as a temporary thing because once the LA house is sold, we’ll reinvest the money.  The good thing now is we’ll reinvest that money at a discount.

But that horseshoe did its work.  We sold most of the stuff we needed over the past few weeks, so we avoided all this carnage.  So we have that going for us which is nice.

But seriously, I don’t think there is anything that has fundamentally changed since two weeks ago when everything was worth 10% more.  If you can stomach it, I think this will prove a great buying opportunity.


That’s my take on what happened yesterday.  What do you think?

Come back Thursday to see the post on investing blunders that I originally meant for today.

I’m Back . . . and retired


Loyal Stocky Fox readers, I know I tested your patience by taking a prolonged break, but I’m back.  I’m a big believer in using excuses, and I have a few good ones for why I wasn’t able to write any posts for the past two months.  Actually, we’ve had some major life changes and are just starting to see the light at the end of the tunnel.


I’m retired!!!

Probably the single biggest change is that I quit my real job and am now entering the ranks of the unemployed, stay-at-home foxes, mid-life crisis ranks of the country.  About a year-and-a-half ago, when we found out we were pregnant with our second cub, Foxy Lady and I really started talking about life and what we wanted.  Fortunately, because a lot of the smart investing we had been doing, much of which I have chronicled in this blog, we had a nice little nestegg that gave us some real options.  After a ton of discussion we decided that I would become a stay-at-home fox.

It took a while to sort everything out with work and to make sure we landed as softly as possible.  After taking advantage of California’s very generous paternity leave program, Medtronic and I parted ways after 16 years (I started there as a 21-year-old wide-eyed cub—crazy).  As an aside, I think Medtronic is a fantastic company and am so thankful that I spent so much of my career with them.  Financially, they are wonderful and have so many programs that allow their employees to build a secure financial situation.

And now I am done with working.  I won’t have a boss anymore . . . actually, I guess I have two bosses: Lil’ Fox and Mini Fox, but they’re pretty cool.  Obviously, when you change careers or even end your career, that has a ton of impact on your finances so you can expect a lot of posts on us going through this transition.


We moved

This is a big deal (but not so big a deal as me retiring since that had three exclamation points).  After Foxy Lady and I decided that I was going to bow out of the game, there wasn’t nearly as strong a tie living in Southern California, so she started looking for opportunities across the country (SoCal isn’t a very good market for her industry).

With that freedom of location, she found an amazing position in Greensboro, North Carolina, with VF Corporation (they own clothing brands like The North Face, Timberland, Vans, Jansport, Lee Jeans, Wrangler, and many more).  It was an awesome opportunity for her—a nice promotion, more money, and a move into the fashion industry which she’s totally passionate about.

If you’ve ever moved, you know that it’s a crazy time in general.  With two little kids and a 14-year-old dog, it’s just insane.  We’re about two months into the craziness and probably have another month to go before we are completely settled in our new home with all our furniture.  It’s been a wild ride and one I’ll certainly be glad to put behind me.

Just like with retiring, when you move there are a ton of decisions that you have to make that have a ton of financial implications.  Getting these right can result in tens or hundreds of thousands of dollars over the years, so you can be assured that I’ll use the move as fodder for plenty of posts as well.


So there you go.  That’s what’s been happening on our side.  Thanks for sticking with me and look forward to some kickin’ posts coming down the pike.  Tomorrow I’ll post on the Top 5 financial blunders people make by following their instincts.