The long view again, and some reflections
It is march 8th. Well, very soon it will be march 9th. 2 years ago, on (and around) the 8th, I called and texted numerous friends and family, and I begged them to buy stocks. I offered many a guarantee of their money if they'd buy. If I was wrong and they failed, I'd give them their principle back. How many people did I get talked into doing it? 2. I failed. I failed my family and friends, I could not summon enough charm to talk them all into it. Who did I not fail? My great friend Tom, my longtime business partner (who, in all fairness, did not require my coaxing to put it all in at that point, he wuld have done it himself, even if i'd have gotten hit by a train), and my parents. Thats it.
My friend who had 15k of savings? refsued. I begged, just put it in ASH, its the best bet on the market today, no risk. refused, blew it on his honeymoon. WHICH WAS IN THE SUMMER OF 2010. He could have had the honeymoon, the house, and then some.
My numerous other friends? naw, its too risky. Tom? Got a new Corvette and threatened, last time I saw him, after hugging me and saying I made his dreams come true, and threatened to put my name on the license plates... My parents? lifetime of poverty and retiring next year on six figures a year of investment income. Employee? He always was a gambler. 5x his money (on 3 grand) and then asked me what my #1 favorite pick was, I said RJET, he's now 4x his money as he got in at 7.xx oops.
How many of my friends and family have aske dme about gold in the last 12 months? Fkn 50, minimum. Its ridiculous. You can't get people to buy ASH for $5.80, butthey line themselves up to buy gold for $1430. Maniacs. If I had 100 bucks for every hour I spent trying to walk people through teh history of markets to give them the best answre I can, only to have them say "well I heard on TV that gold is going up", I could buy a Las Angeles nightclub tab. And get really, really drunk. Oh well.
March 8th, 2009, I put my son to bed, after a pretty normal night. And then, for the first time since late February, I looked at teh balance in my various accounts, added it up. It hurt, right on my chest and stomach, to see the balances. And I had a long talk with myself, I just said "ok, you lost a crapload of money, you need to quit thinking about Lambos and Corvettes and just get serious, there is still enough money to live on here". Then I sat down and read Dreman, again, and I felt a bit better. And then I listened to conference calls and read 10Qs all night, for ACAS, for MCGC, for XL, and more. Eventually, after probably 20 cups of coffee and no sleep, I became satisfied that I wasn't wrong. The next day I bet, literally, the farm on the theroy that mark to market accounting would at some point reverse its wrongly-levied pains, and when it did, the results would be dramatic for BDCs and insurers. Tuesday, ... Vikram Pandit wrote the memo that started this all, and that was the swan song of the bears for that big crash. By Friday of that week I was up huge. I dumped my girlfriend at the pub that night when she complained at me for gloating that I'd won. She, like most GFs I have ever had, never gave a crap about what I was working on. So she had to go. And I fairly well sensed that I'd won... Pandits memo was a game changer, an absolute game changer. Nobody ever mentions that, when they talk about this big rally. But that changed the color of the world. It was hard to say, after that, that C and BAC should be nationlized. if C is profitable, ... see what I mean? It was so obvious, that day, that the game was anew. We partied so hard that week, it was such a great feeling. I never felt that feeling again until August of 2009.
Anyway, for all of the 100% rally off the bottoms, and all of the literally 10x your money if you wer esmart (I have not been smart over teh course of this, rather I have made myriad mistakes) ... for all of history just repeating itself yet again...
I still bet on history. Which suggests we are not out of a long, miserable, perhaps even usually ugly secular bear market. And I've thought alot about what would happen if we were about to embark on a secular bull... I have basically just two ideas:
1. commodoties and stocks would decouple, with stocks moving to the upside. This hasn't happened at all, and in fact commodities may ahve actually outperformed since the March 09 bottoms. This clearly, to me, suggests we are still in a secular bear. See my blog from a week ago for the most gorgeous chart showing why
2. look at teh secular bear from teh 70s. Small caps (nasdaq) took off from the march 1974 bottom and never really looked back. The DJIA stayed mired in a miserable slump for nearly another decade, before finally reaching liftoff in the early 80s. HUGE outperformance from small caps over the last part of the 70s.
I honestly think that we won't see significant multiple expansion in the "high quality" big cap stocks taht all of the panties-in-a-bundle gurus (who are all about 80 years old) want to outperform (because their funds are too big to buy anything else) ...
... risky call here... until the next secular bull begins...
... and then we will see multiple expansion in those greatest of companies.
Commodity decoupling and multiple expansion in the greatest of cmpanies, we have not seen either yet, and BOTH of those will, in my guesstimation, mark the onset of the next secular bull.
Do we make new highs on the S&P before the next secular bull? yep.
Do we go meaningfully lower than today before the next secular bull? yep.
Therefore I honestly think that caution is the best stance right now. FOCUS ON THINGS YOU KNOW, KNOW, will make money. Don't make me point htem out. ... I'd hate to help the thousand pukes who I don't particularly care for, and who occasionally put my blogs on lame brained websites advertising lame brained services, I really would.
Buy the BIG dips, that will define returns for most investors ove rthe next 5 yeras.
All of the above is in my opinion only, and I am clearly extremely dumb, and possessing of an extremely poor singing voice.
happy anniversary people. 2 years ago it was a very, very scary evening, in which I had to summon every last bit of self confidence to do what needed to be done. Today, ... a very different day, and, frankly, I have no great confidence in any direction.
I cashed out most of my hedges (except VXZ) last Friday, I bougth more today. I just don't love the market here one bit.