Hmmm....

From ghoulies and ghosties

And long-leggedy beasties

And things that go bump in the night,

Good Lord, deliver us!

{Traditional Scottish prayer}

The market's are up something close to 5% since around Labor Day.  Sometimes that is enough, along with factoring in dividends, to be considered an OK year.  There has not been a real pullback in stock prices in months.  Volatility has collapsed.  There seems to be only one direction for stocks to move and that's higher.  Investors rejoice at this.  They hate volatility,  or at least the part of it that leads to price declines.  Presumably they don't mind volatility spikes when it results in higher prices.  Traders hate this because there never seems to be a moment when the markets let them in.  

It's autumn now and we're not far removed from the spooky season that is Halloween and in that spirit I'll share a few of the things going now "agoing  bump in the night" that have my antenna up.

I'm being asked more now by folks out at parties or dinners what I think of the markets.  The medical marijuana folks are also back asking my thoughts on the industry.  The last time I noted this was back in March and that's also the last time the market corrected somewhat.  That correction was paltry, about 2.5%, and shows the power of the move we've seen this year.  I didn't see many such questions over the summer but they've picked up as the temperature's started to fall.

I'm being asked more and more about bitcoin.  One client asked if he could buy it in his IRA {No you cannot do this per the custodian.}  Another wanted to buy a bitcoin ETF or mutual fund {No-I will not tell you the symbols if they exist.}.  An acquaintance  claims to have made $10,000 in bitcoin.  When pressed he refused to go into specifics.  For the record I have no opinion on bitcoin and no real knowledge of the nascent marijuana industry.  If you want to speculate in these areas then you'll have to do so on your own.

I was asked by another gentleman I know recently about spread strategies in options.  This guy, based on what I know and have seen over the years, has no business trying to invest this way.  Irrespective of whether it's bitcoin marijuana or options, nobody asked me about these things the past few years.  In fact nobody showed much interest in the markets outside of business prior to 2017.  

A client tells me about a friend of hers who claims to have made 66% buying stocks this year.  That's all she knows.  She doesn't have specifics.  Another client asked me if I thought his asset allocation the other day was too conservative.  He's in his mid-70s.  Last year he was convinced markets would crash after he found out Mr. Trump was going to be President.

In that vein, the AAII Investor Sentiment Survey shows its highest bullish reading in 11 months.  The bulls came in last week at 45%, a five percentage point change from last week and well above its historical average of 38.5%.

All of these things make me go hmmm..... Honestly, if we weren't in seasonally the best period of the year for stocks I'd be thinking that the probability of a more significant sell-off would be much higher.  As it is I wonder if performance chasing might carry us into the new year.  I off course don't know but while there may be now a hint of frost on the ground outside there's now to me more than a hint of froth in the markets.

Back Friday.