Twitter (TWTR) CEO Jack Dorsey takes a lot of heat for the company’s weak performance, especially since he’s juggling the running of two multi-billion dollar companies at the same time.  Along with running Twitter, Dorsey is the CEO of Square (SQ) as well.  But you don’t hear people talk about how well Square (SQ) is doing nearly as much as you hear people talk about how poorly Twitter is doing.  If you combine the performance of both companies, Dorsey is doing just fine.  (Don’t tell that to Twitter shareholders!)

As shown below, while Twitter (TWTR) is down 30% from its IPO back in late 2013, Square (SQ) is now up 263% since its IPO in late 2015.

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Below is a chart showing the combined market caps of both Twitter and Square.  Note that both companies have market caps that are very similar at the moment, but Twitter still has a slight edge.  Twitter is currently worth about $13.5 billion while Square is at $12.5 billion.  But only Square has been adding value over the past couple of years.

As shown below, over the last year, if you “invested in Dorsey” and owned an equal amount of Twitter and Square, you’d be up nearly 100%.  There’s not much wrong with that kind of return!

Wednesday’s data on Housing Starts and Building Permits disappointed consensus expectations, and while some of the declines can be chalked up to the hurricanes in the South, we would note that Starts in both the Northeast and Midwest regions also showed declines.  One silver lining to this month’s data was that in both the cases of Housing Starts and Building Permits, the majority of the weakness was in multi-family units, which tend to be more volatile.

Residential construction is a big part of the US economy, so naturally, an uptick or slowdown in activity is going to have an impact on the business cycle.  The chart below compares historical levels of Housing Starts on a 12-month average basis to expansions and recessions since 1967.  It’s pretty easy to see in the chart that peaks in Housing Starts tend to occur late in the cycle, while troughs are formed right after the recession ends.  What’s important to note, however, is that even after the peak level of Housing Starts for a given cycle, a recession doesn’t usually begin for at least another year.

So where do things stand right now with Housing Starts?  Even after this month’s data, the 12-month moving average of Housing starts actually ticked higher in September, rising from 1.199 mln up to 1.204 mln.  That’s the highest level since March 2008.  While that’s definitely a positive data point, we would also note that barring a major improvement in the data over the coming months, we have likely seen a short-term peak in this reading as the 12-month average will be dropping average monthly readings of 1.243 mln for the next six months.

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Taking a look at a shorter term window, the chart below shows the 12-month moving average of Housing Starts and Building Permits going back to 2010.  Here it’s a little bit easier to see the most recent uptick in Housing Starts, but at the same time, the 12-month moving average of Building Permits has already started to tick lower.  As is the case with Housing Starts, barring an imminent uptick in activity, this 12-month moving average will continue to decline in the months ahead.

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Anyone who has ever attempted to make money trading has learned the lesson all too quickly that timing is everything.  Some of the world’s greatest investors have lost nearly everything because their timing of the market was just slightly off.  Without getting into individual names, we saw this among some of the greatest value investors in the late 1990s when they bet against internet stocks only to throw in the towel just before the peak, and then more recently in 2011 when some big-name investors went long European sovereign debt only to cover just before yields peaked leading to one of the biggest bond market rallies of our lifetimes.  In both cases, the thesis was spot on, but because they were just a little too early, they ended up with nothing (literally in some cases) to show for it.

While the recent performance of biotech stocks hasn’t exactly been monumental, it does provide another example of the importance of timing and the market.  With a gain of over 15% in the biotech ETF (IBB) since mid-June, just about any trader will tell you that it’s been a good few months for the group.  However, looking at how that performance has been distributed over the last four months, all of the gains have come over the course of just nine trading days.  The first leg of the rally came in mid-June when IBB surged 9% in four trading days.  For the next two months, IBB did nothing until late August when another four-day rally pushed the ETF higher by 6%.  Then from the start of September through yesterday, IBB did nothing until rallying modestly today.  So yes, the last four months have been a very good time to be long the biotech group, but if you were late getting in, or tried to time the moves by getting in and out, there’s a good chance you’ve missed out on most of the move.

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