Friends

Yesterday’s green wave turned into a bloody red mess today. Led by a plunge in tech names, the market averages cascaded lower during the early part of today’s trading session and things actually got worse as the day wore on. The numbers were staggering with the Dow down 3.44%, the S&P 500 down 4.35% and the Nasdaq down 5.52%. The AI trade is unraveling as market participants believe that the Democrat blue wave is a death knell for the build out needed to keep the AI momentum going. There will be winners and losers, but for the now it’s sell first and ask questions later. Yesterday’s move higher in stocks appears to have been about positioning and relief that there would be no political disruption after the election. Today’s massacre was about who will be the big losers if the AI revolution is ground to a halt. Remember a big percentage of the growth we have seen in GDP in the past two years has been driven by the AI buildout.

How bad was it for the market averages? Well, by the close the Dow Jones Industrial Average was down 1,833 points to finish the day at 51,523. The S&P 500 was down 334 points to close at 7,353. The beleaguered Nasdaq Composite Average was down 1,421 points to close at 24,314. Gold was up $41 to trade at $4,114 per ounce, while oil was up $2.49 to trade at $90.61per barrel WTI.

With regards to the movement in stocks the past two trading sessions, things probably aren’t as good as it appeared yesterday, and things probably aren’t as bad as they appear today. These volatile moves are dramatic and can be scary, but it’s nothing new to all of you who have read these emails over the past 20 years. We know the drill – stay calm and stick to our game plan. What was John Bogle’s famous line- “Don’t just do something, sit there”.

It probably doesn’t make a lot of difference at the moment, but we get a non-farm payroll number tomorrow. Let’s see how this volatile week finishes out. Stay tuned.

Have a nice evening everyone.

Jim