It is always refreshing to step away from the keyboard for a few days and hit the “reset button,” which is exactly what I did last week. My wife and I took a quick trip to Mexico to get a little sun on our face while we wiggled our toes in the sand.
I came back astonished.
Over my 30-odd years of working with money in various capacities, I learned to “shut-up and listen.” This is particularly the case when you are in an airport lounge or packed like sardines in a missile-shaped tube hurling through the air at 35,000 feet.
People love to talk…if you let them.
I had a dozen “listening sessions” with a wide variety of people who each told me roughly the same thing summarized as follows:
You get the idea.
And just when I thought I was sure I had the most bullish views wrapped up – Kevin Matras fro Zack's Research hit my inbox with the following:
Sounds like a Herculean task on the surface, but it's really not. In fact, the market only needs to gain on average of 14.9% per year in order to do so. That's not such a stretch given the market has been averaging 14.9% per year since this bull market began in early 2009, even though GDP (prior to this year) has only been increasing at an anemic 1.48% annual rate.
My 5-year doubling thesis also means that we won't see another recession until stocks double again, nor will we see another bear market until stocks double again.“
So, there you have it.
No bear market until the market racks up another 2600 points and dwarfs every other economic growth cycle in history.
Meanwhile….Back On Earth
Before I go further, let me clarify one thing.
As a portfolio manager, I am neither bullish nor bearish. I don't really care which way the market is headed personally.If it is rising, as it is now, I am long equities. When it reverses that trend, I will either be short equities and long bonds and cash.
That's my job.
My job is also to pay attention to the risks that could quickly remove large chunks of investment capital from my client's portfolios. Like any professional gambler knows, you can only play the game as long as you have a “stake” to play with. Lose your capital, and you lose the game.
The Perfect Storm Cometh
In the movie, “The Perfect Storm,” George Clooney plays the Captain of the “Andrea Gail.” The Captain, after having a bad start to the fishing season, convinces his crew to go out one last time and they venture well past their usual fishing grounds leaving a developing thunderstorm behind them. After ignoring repeated warnings, a desperate Captain, and crew, head into a confluence of two powerful weather fronts and a hurricane in order to cash in on their bounty.
