Chief Strategist https://xitter.cf/t.co/pIhX6wyW68, Host: RealInvestment Show, Editor https://xitter.cf/t.co/wmWaTk1TpO, PM for https://xitter.cf/t.co/lf8aFSFI6i Newsletter Signup: https://xitter.cf/t.co/qxJrsTVRHR
Houston, Texas
Joined June 2009
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Griffin May Be Right About AI. The Timing Could Be Very Wrong.
lanceroberts.substack.com/p/…
With stocks approaching oversold conditions, will support hold and trigger a year-end rally, or is a deeper market correction ahead?
Here's my latest Before the Bell Report :
10-26-26 "Stock-Bond Correlation: Oil Broke The Hedge. Oil Will Fix It." xitter.cf/i/broadcasts/1vKpPNyEp…
AI remains very early in its adoption phase and still has a long way to go to catch up with past technologies.
h/t @MikeZaccardi @thedailyshot
This week, 44% of the S&P 500 will report earnings. The good news so far, is that 72% of companies have issued Q3 earnings guidance above consensus estimates. That's an all-time record.
h/t @FactSet
Good news for Monday morning.....
The bad part of October is almost over. Historically, October’s final week has often been kind to U.S. stocks. Late-month lows are nothing new, and deeply bearish sentiment could set the stage for another buying opportunity.
h/t @ISABELNET_SA @CarsonResearch
The Daily Market Trading Update: October 26, 2026
- The Market's Biggest Buyer is Stepping Back
- A Technical Review
- What To Expect In The Week Ahead
realinvestmentadvice.com/res…
As energy prices fuel inflation and economic growth slows, could Treasury bonds become a safe haven again? We'll examine how rising oil prices, inflation, and Federal Reserve policy disrupted the historical relationship between stocks and bonds, and could eventually restore bonds' protective role, on #TheRealInvestmentShow, streaming-live at 6am CDT on YouTube, Meta, LinkedIn, & X.
(Links are in the comments)
Watch the full show here:
youtube.com/c/TheRealInvestm…
xitter.cf/LanceRoberts
linkedin.com/in/realinvestme…
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10-25-26 The Best Investing Books & Why Market History Matters
What are the best books to read if you want to become a better investor or trader?
The answer depends on what you're trying to achieve. If you're interested in day trading, study technical analysis. John Murphy has written some excellent books on the subject. If you want to trade options, learn about options strategies, pricing, and risk management. And if you're managing your own portfolio, start with the fundamentals.
Benjamin Graham's work, including Security Analysis, should be essential reading for serious investors. A Random Walk Down Wall Street is another valuable resource.
But there's one category of books I believe every investor should prioritize, regardless of their strategy: MARKET HISTORY.
Study previous bull and bear markets, speculative manias, financial crashes, and investor psychology. Understand how market cycles develop, why valuations matter, and how excessive optimism eventually turns into painful losses.
Why is this so important? Because bull markets forgive a tremendous number of investing mistakes.
You can buy companies with no earnings, invest in fundamentally weak businesses, overpay for great companies, or take excessive speculative risk. When everything is going up, you can still make money.
And that's precisely where the danger begins.
Investors start confusing favorable market conditions with their own investing abilities. They become overconfident, increase their exposure, and convince themselves that the strategies working today will continue working indefinitely.
Then the bear market arrives.
And that's when all those mistakes get exposed. What looked like investing brilliance during the bull market can quickly turn into devastating portfolio losses.
Options trading is a perfect example. You can read every book about options strategies and become highly proficient at executing trades. But if you don't understand market cycles, you may become most aggressive precisely when the risks are greatest.
We tend to trade options most aggressively during strong, rising bull markets because the prevailing trend works in our favor. But that environment doesn't last forever.
Look at today's enthusiasm surrounding AI. We're clearly experiencing a speculative mania, and there's nothing unusual about that. Markets have gone through these cycles repeatedly throughout history.
The problem is when investors begin believing that "this time is different." It rarely is.
That's why I keep so many books about financial history in my library. They help shape our long-term market outlook and remind us that understanding risk is just as important as identifying opportunities.
So, learning how to make money in a bull market is one thing. Learning how to protect that money when the cycle turns is what separates successful long-term investors from everyone else.
Please ❤️like, bookmark🔖, and 🔁share with fellow investors.
10-24-26 Good vs. Bad Inflation — A Quick Guide To Inflation
Not all inflation is created equal. In this Short video, I explain why some inflation can accompany economic prosperity, while other types can erode purchasing power, weaken consumer spending, and threaten economic growth.
Good inflation typically accompanies a strong, expanding economy. Following World War II, the U.S. experienced a prolonged period of industrial growth, rising wages, expanding employment, and increasing consumer demand. Americans were buying homes, cars, and consumer goods, while businesses were expanding production and hiring workers.
As economic activity accelerated, wages, prices, and interest rates rose together. Higher incomes supported greater spending, creating a positive economic feedback loop. In this environment, inflation wasn't necessarily a problem because households had the income growth to absorb higher prices.
Bad inflation is a different story.
Consider what happened during the pandemic. Economic shutdowns disrupted supply chains and reduced the availability of goods, while government stimulus simultaneously boosted consumer spending power.
The result? More money chasing fewer goods, pushing inflation to approximately 9%.
Although inflation subsequently declined significantly, the damage to household purchasing power didn't simply disappear. Lower inflation means prices are rising more slowly, not that prices have returned to previous levels.
And that's where the real problem begins.
Economic growth remains relatively modest at around 2%–2.5%, while the labor market shows signs of stagnation. Companies aren't hiring aggressively, but they're also reluctant to fire workers, creating a labor-hoarding environment that limits wage growth.
Meanwhile, higher oil prices and geopolitical tensions involving Iran threaten to create additional inflationary pressures.
Unlike demand-driven inflation during a strong economic expansion, these external price shocks don't necessarily generate higher wages or stronger employment. Instead, consumers face rising costs without the additional income needed to offset them.
The critical distinction is real wage growth.
When wages rise faster than prices, purchasing power improves. When prices rise faster than wages, households become financially squeezed, discretionary spending weakens, and broader economic growth can suffer.
For investors, the takeaway is the following: inflation alone doesn't tell the whole story. What matters is WHY prices are rising and whether wages, employment, and economic growth are strong enough to support them.
Good inflation can accompany prosperity. Bad inflation can undermine it.
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Bull Bear Report: Week Of October 23, 2026
In this week's report we:
- Review the technical backdrop of last week's action and what to expect.
- Discuss oil's connection to the stock/bond ratio and why the hedge may return.
- A full suite of technical analysis to get you ready for next week.
lanceroberts.substack.com/p/…
Lance Roberts retweeted
10-22 26 The Fed Is Fighting The Wrong Inflation Problem
In this Short video, @MichaelLebowitz and I discuss whether the Federal Reserve is making a major policy mistake by fighting inflation that is primarily driven by rising oil prices rather than excessive consumer demand.
Consumer spending accounts for roughly 70% of U.S. GDP, and when the Fed raises interest rates, its objective is to increase borrowing costs, discourage consumption, weaken economic activity, and ultimately bring inflation down.
But if an economic slowdown or recession follows, is that really a policy mistake? After all, reducing demand is precisely what monetary tightening is designed to accomplish.
The real question is whether the Fed is fighting the right inflation problem.
When inflation results from an overheated economy, accelerating wages, and consumer demand exceeding available supply, higher interest rates make sense. But today's inflationary pressures are largely driven by elevated oil and energy prices, not unusually strong demand.
The distinction matters because energy costs extend far beyond gasoline prices. Airlines, for example, are raising fares to offset soaring jet fuel expenses, even though they cannot fully recover those costs. Those higher fares contribute to core inflation despite being fundamentally energy-driven.
Michael argues that if energy and other heavily energy-sensitive components were excluded, underlying inflation could already be close to the Fed's 2% target.
Meanwhile, consumer demand is not particularly strong. By continuing to raise rates, the Fed risks weakening an already fragile economy without addressing the underlying supply-side inflation shock.
Consider what happens if a geopolitical breakthrough, such as a peace agreement with Iran, sends oil prices toward $60 per barrel and gasoline prices sharply lower.
Energy-driven inflation could begin reversing naturally, with lower transportation costs eventually feeding through to airline fares and other consumer prices.
But monetary policy operates with a lag. The economic damage from previous rate hikes would continue accumulating even as inflation pressures faded.
That creates the danger of excessive tightening: falling energy prices and weakening consumer demand could combine to produce a much sharper economic slowdown than necessary.
The key takeaway: a Fed policy mistake isn't necessarily causing economic weakness through higher rates. It's deliberately destroying demand to fight inflation that was never primarily caused by excessive demand in the first place.
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10-23-26 Wall Street Loved Buybacks — So Why Does It Fear AI Spending?
In this Short video, @MichaelLebowitz and I discuss one of the biggest mistakes investors make when evaluating AI hyperscalers like $GOOGL, $MSFT, and $AMZN: treating all negative free cash flow as equally concerning.
There's a fundamental difference between a company burning cash because its underlying business is struggling and a highly profitable company temporarily sacrificing free cash flow to invest in future growth.
When negative free cash flow results from operational problems, that's a legitimate warning sign. But when a company generates substantial operating cash flow and deploys that money into AI infrastructure, data centers, and other long-term investments, that's an entirely different situation.
Before the AI CapEx boom, major technology companies were generating approximately $189 billion in combined annual free cash flow.
That figure has come under pressure as AI spending accelerates. But projections suggest free cash flow could stabilize in 2027, recover to approximately $150 billion in 2028, and reach a record $389 billion by 2029.
If those forecasts materialize, today's spending could lay the foundation for substantially greater future cash generation.
And here's where Wall Street's reaction becomes particularly interesting.
A few years ago, investors celebrated when Big Tech companies spent billions buying back their own shares. Buybacks supported stock prices, but they also suggested that management had limited opportunities to reinvest excess cash into the business.
Now those same companies are saying they have something potentially far more productive to do with that money.
Instead of simply repurchasing shares, they're investing aggressively in AI, even raising additional capital through debt or equity to finance projects they believe could generate substantial future returns.
Consider the economics: if a company can finance an investment at a 5–6% cost of capital and potentially earn 20%, 30%, or even 40% on that investment, the long-term value creation could be enormous.
Yet Wall Street cheered the buybacks and now worries about the investments.
Of course, those returns aren't guaranteed. AI spending must eventually translate into sustainable revenues, profits, and cash flow.
But the critical question isn't whether AI CapEx is temporarily reducing free cash flow. It's whether that capital can generate returns exceeding its cost.
Negative free cash flow caused by a deteriorating business is a problem. Negative free cash flow caused by potentially high-return investment is an entirely different story. And that's the distinction investors shouldn't overlook.
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We noted a couple of weeks ago that extremely negative breadth tends to be a contrarian indicator. Yesterday’s outperformance of the equal-weighted index ranks among the largest in history.
With the market stuck in a broad consolidation over the last several months, the overall trend of strong earnings growth is keeping the decline in valuations intact.
h.t @TimmerFidelity
With companies beating very elevated expectations, Q4 estimates continue to rise. Full year estimates, for 2027 a rising as well.
h.t @thedailyshot
This is actually a good thing. Most of the arguments today are that "Boomers could buy a house for the same price as a loaf of bread."
They were also buying 1100 sq ft houses, with no pool, no upgrades, and window units for air conditioning.
Low rates pushed the sizes houses far beyond what people actually need, and the cost along with it. A reversion to norms (including a reversion of expectations to what a "first time" home should be) will begin to realign the housing market over time.
