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“The reason that you can win at poker and horse racing is the same – you are not betting against the house; you are betting against the other players.” – Steven Crist
Forty-eight years ago today, spectators in the hot, humid long island sun witnessed one of the greatest performances in the history of horse racing, and in the winner’s circle, there was Secretariat, winner of the coveted Triple Crown for the first time in a quarter-century after completing one of the greatest runs in horse-racing history. The horse ran the fastest Kentucky Derby ever, a record that still stands today, easily won the Preakness (unofficially in record time), so it was only fitting that the win at Belmont came in at a record of 31 lengths and likely barely breaking a sweat.
Like poker and horse racing, when it comes to investing, rather than betting against the house, which always wins, you are betting against the crowd. That means that the more informed you are as an investor, the better your chances of success. Just as a bettor who wagers based on the name of the horse or the color of their silks usually leaves lighter in the wallet than when they arrived, an investor chasing the hottest stocks or most popular trends usually, even during one of the greatest runs in market history usually ends worse off than the person on the other side of the trade.
US equity futures are right around the flatline this morning, and the overnight session was a snoozer as futures have traded in a range of less than 0.25%. Crypto assets have seen a bounce after yesterday’s plunge, and commodities are mixed.
Read today’s Morning Lineup for a recap of all the major market news and events including an update on infrastructure talks, the latest economic data from Asia and Europe, and the latest US and international COVID trends including our vaccination trackers, and much more.
Yesterday, investors who still read a physical newspaper were greeted with some interesting headlines related to inflation. Right below the fold on the front page of the Wall Street Journal, they saw “Commodity Prices Skyrocket, Adding to Inflation Fears”. Then on the front page of the Markets section (B1) right at the top was the headline “Traders Bet on Return of $100 Oil”. With headlines like that and a CPI report coming up on Thursday, weakness in the Treasury market would be a safe assumption. Not so fast. While the yield on the 10-year US Treasury was an already low 1.57% when yesterday’s Journal came off the presses, ever since then, it has done nothing but go down. In fact, as of this morning, the yield dropped below 1.5% and on pace for the lowest closing yield in over three months.
