Surprise! It’s A Rally!

“The first wave of quarterly corporate earnings reports arrived stronger than expected, soothing investor fears of another economic crisis and helping push the Dow Jones Industrial Average to its strongest weekly gain since March. The Dow ended the week up 7.3% at 8743.94, taking just five days to recover almost all the 7.4% decline of the previous four weeks…

– E.S. Browning, Earnings Uptick Lifts Confidence, Wall Street Journal,
July 20, 2009

Ruh roh. Once again the stock market threw a surprise party and forgot to send out invitations. It can be such a pain that way.

The four weeks after the market’s spring rally peaked on June 12 were a long, slow downward slog. All the optimism seemed to have seeped out of the news reports. The experts told us that sentiment on Wall Street had (cue the kettle drums) turned negative. Economic indicators had stopped surprising us with good news. For every step the market took forward it seemed to take two back the next day. In early July the AAII Index, which measures the investment sentiment of individual investors, hit its highest bearish level since the market bottom in mid-March (let that one sink in for a minute, by the way). The rally was over, we were told. Once corporations began reporting their inevitably dismal earnings in mid-July, the only thing left to debate would be how low the market would go.

As Gilda Radner’s old SNL character “Emily Litella” would have said… “Never mind!”

As the earnings reports began streaming in, one company after another topped expectations. Simultaneously, economic indicators about the credit market and manufacturing activity began showing significantly positive signs. None of it was anticipated, but the stock market could care less. It gained back nearly all of the prior four week’s losses in just five trading sessions. If you blinked, you missed it.

This is the part about investing that escapes so, so many people. Stock market gains come quickly, massively, and unexpectedly. In fact, they often come when you expect the opposite. It is a story as old as the markets themselves. And it is why only the slimmest handful of investors ever obtain the returns that the stock market is trying so desperately to give them.

Of Hank Williams, Jr. and Hard Times…

A few days ago I was in a store looking at smokers (as in meat, not cigarettes) trying to decide on a new model. I developed an interest in the Big Green Egg ceramic cookers about five years ago and it has since blossomed into either a passionate hobby or expensive obsession, depending on whether you are talking to me or my wife.

Anyway, the Muzak in the store was playing “country classics,” I suppose you would say, none of which I was paying attention to until an old familiar song my college roommate used to wear out on our cassette deck came on:

The preacher man says it’s the end of time
And the Mississippi River she’s a goin’ dry
The interest is up and the stock market’s down
And you only get mugged if you go downtown

It was Hank Williams, Jr. singing “A Country Boy Can Survive,” which (the miracle that is Google tells me in 0.37 seconds) was released in 1981.

My first concern was that ol’ Hank couldn’t find a way to make “Interest rates are up” work in the third line. “The interest is up”? What does that mean? I mean – c’mon – mine was right there!

But I quibble.

The thing that really stood out to me about that song was how appropriate Hank’s lyrics could have been today (except, of course, for the high interest rates). In fact, as I dug deeper into the history of the song, I learned it has actually had three different iterations in the past three decades.

Here’s the opening verse from the version that was released in anticipation of the CERTAIN DOOM THAT WAS OTHERWISE KNOWN AS Y2K:

Computer man says it’s the end of time
December 31st 1999
People buyin’ up all the surplus things
Afraid of what the New Year will bring

Seems kind of quaint now, doesn’t it?

And then there was the version that was released after 9/11, which is decidedly more rousing:

People think it’s nearly the end of time
Cause we’re together and we’ve drawn the line
Our flag is up, the stock market’s down
But we’re all united from the country to the town

So what can we discern from the fact that Hank Williams Jr. was able to parlay an apocalyptic song written in 1981 into three different iterations spread over 20 years? (I mean, besides the fact that it must be a seriously catchy tune.)

Three things, I think:

1. Doom-and-gloom is a recession-proof business. If we aren’t worried about today, we’re worried about tomorrow, and there are always plenty of people around to help make sure we’re worried.

2. It always seems worse today, in real time, because we worry about all the unknowns as well as the knowns. In retrospect we can see that Y2K was no big deal and 9/11 was a very big deal. But in real time every potential crisis seems like a big deal.

3. From despair comes defiance, and sooner or later that quality galvanizes us and pulls out of the quagmire. Until, inevitably, we let our guard down, forget our lessons and have to learn them all over again. It is a cycle as inherent to humans as the seasons are to nature.

It occurs to me that Hank hasn’t gotten to the 2008/09 version of “A Country Boy Can Survive,” so I want to go ahead and get my own version down ASAP before he comes around for Version 4.0. So here goes:

Talking heads say it’s the end of time
Cause the budget deficit’s gone sky-high!
TARP & TALF are the words today
And we’re printing tons of money in the U-S-A!!!

Here’s hoping that seems as quaint in ten years as the Y2K version does today…

A Search Through “Time”

One of my favorite new web toys to play around with is the cover search feature in the Time Magazine archives. The folks at that magazine have put every Time cover since its inception in 1923 in a searchable format on their web site. No doubt it must have been an epic slave labor project for some poor group of interns, but, hey – that’s what interns are for.

Anyway, the reason I am so intrigued with this feature is that you can search covers by hundreds of different categories and themes that Time has assigned to their thousands of covers. You may be interested to know, for instance, that Darth Vader has been on more covers (4) than Mother Theresa (2).  It is also interesting to note that “Family Values” has garnered only one cover in Time’s history, but “Sex” has garnered 22 covers.  (I guess this explains why Hugh Heffner lives in a mansion.)

While you can certainly idle away some time fooling around this site, it does offer a practical application for my work as an investment advisor, because it provides some great perspective about how the media makes us believe that every point of time we are in is uniquely dire, yet in the big picture we somehow seem to keep muddling along.

For instance, this cover in 1979 would have had us believe that we were on the verge of a new Ice Age:

So to look at this cover from 2001 you would wonder how we went from Ice Box to Frying Pan so quickly:

And whatever happened to the hole in the Ozone layer (see 1992 cover below)? Did that fix itself, or did the media just get bored with it? Or did our sunscreen get better?

While some stories change, though, many of the media’s obsessions seem to repeat themselves in familiar patterns. Consider these covers from 2008 (left) and 1992 (right):

    

You’d never have guessed the stock market more than tripled during that span of time (even after the ’08 crash), would you?

And if you think that’s Déjà vu all over again, consider these four covers from (left to right) 1984, 1974, 1972 and 1970:

    

    

The point to all this is not to assert that we don’t have real problems to contend with. It’s that contending with problems is a never-ending process in life. But the media can’t sell that premise; they need you to buy magazines and watch TV shows, so every single thing has to be presented as uniquely dire.

So don’t let the mass media fear machine guide your investment decisions, because, after sifting through nearly a century of Time covers, I can assure you that you will never find a comfortable time to be in the market.

GM Goes Bankrupt And The Market Throws A Party

Let’s say that five years ago someone came to you with a piece of information and a proposition:

On June 1, 2009, this seer of the future informs you, General Motors will declare bankruptcy. And then the oracle gives you a choice: You can have your money in the market or out of the market that day, but you have to decide now.

What would you have said?

(If you said “in” then you are throwing the whole curve; please proceed to another blog.)

If ever there was a vivid example that the stock market is forward looking, it was this past Monday – a day when a towering icon of American industry finally heaved its last, tortured breath in its old form, and yet the Dow Jones Industrial Average gained 220 points. I heard a half-dozen or more comments from clients, friends and family that day, remarking on the disconnect of the market’s reaction to this momentous event.

Only it wasn’t a disconnect at all. Being the incredibly efficient pricing mechanism that the market is, it had long ago assessed all the variables relating to GM and had already reached the conclusion that bankruptcy was inevitable. In fact, some part of the volatility in the stock market these past eight months is no doubt attributable to the market working through this reality well before the actual day arrived. So the official news Monday was greeted more with relief than it was dread.

The forward-looking nature of the market is something that most investors fail to understand, because human nature is to react to the period of time we are in presently. We extrapolate the present into the future and make investment decisions accordingly; this is why investors plunge headlong into stocks at Dow 14,000 and run screaming for the exits at Dow 6,400 when stocks are on sale. Meanwhile, the market is already out ahead, assessing the next part of the economic cycle. It is not interested in where we have been; it is looking at where we are going.

This is why the market’s reaction to GM’s bankruptcy filing was more yawn than gasp.  Or, to paraphrase a saying popular among today’s youth:

“Been there. Priced that.”

When An Accused Murderer Laughs At You, You Know You’re Having A Bad Day

A few weeks ago I received a summons for jury duty.

“No sweat,” I said to myself, noting that the box marked “standby” was checked. I’ve gotten a half dozen or so jury summons (summonses? summonsii?) in the past ten years, and I’ve been a standby for all of them. In each case I’ve been dismissed by phone without even having to go downtown. Piece of cake.

So it was to my great chagrin and extreme dismay that, two weeks later, I found myself sitting in a courtroom in a skinny little pool of thirty potential jurors waiting to be interviewed by the Fulton County assistant prosecutor and public defender for a capital-freaking-murder trial that was expected to last at least a week. (This is why my old journalism school professor told me that when we “assume” it makes an “ass” out of “u” and “me.” In this case, mostly “me”…)

On a break, before the final jury was picked, I texted a number of friends and family to tell them of my predicament.

“Just lie!” one of my friends instructed me. “Just tell the judge you think he’s guilty now – don’t even need to have a trial!”

“Yeah, right,” I thought to myself. “Easy for you to say behind your computer. You come stand down here and look a superior court judge and D.A. in the eye and tell them a big, fat, obvious lie.” No, thank you.

Nonetheless, I most definitely did not want to be on the jury, particularly because the defendant’s extended family took up the entire back row of the courtroom and the court clerk kept calling: “Mr. Calhoun? MR. JACK CAL-HOUN???” Like it’s hard to find out where someone lives these days.

So I resolved when they interviewed me to be truthful and yet to try to project an air of being a really bad choice for the jury – however one does that. After mulling it over, I decided to go for “intense.” Make both sides wonder if maybe they didn’t know me as well as they thought, like maybe I might be the kind of wildcard that would do the opposite of what they were expecting in the jury chamber. I lowered my forehead as much as I could and tried to look hard at everyone without actually scowling or appearing threatening. It was a delicate balance.

Only, the very first question knocked me out of my game. Or, more specifically, the reaction to my answer.

“Mr. Calhoun, what do you do for a living?” asked Mr. Assistant D.A.

“I am an investment advisor,” I said.

And then the most shocking thing happened. The courtroom spontaneously laughed. Laughed!

And it wasn’t a laugh like you might hear if someone is saying “Ha ha, that’s neat!” It was the kind of laugh you hear when someone tells you a story about something humiliating that happened to them and you are just so glad you aren’t them. Like “Ha ha! That sucks for you!”

Even the defendant chuckled – and he was facing the electric chair!

Now I felt like I was on trial. “No, it’s not like that!” I wanted to tell them. “I’m one of the good guys. We actually help people!”

But it wasn’t exactly like I had the floor, being a murder trial and all, and it seemed a bad time to try to explain the finer nuances between being a product-pushing stock broker and a conflict-free, fee-only investment advisor.

The D.A. looked at me with a modicum of compassion. “Been a tough six months, huh?” he said. Rather than argue with him at this point I just accepted my fate and played the hand I’d been dealt.

“It’s been like working for the Suicide Prevention Hotline,” I said. At least this time I got a laugh on purpose.

Then the Public Defender had his turn querying me. “Mr. Calhoun, you answered ‘yes’ to a lot of our questions, didn’t you?” he said.

This was true. I tried to think of any arcane example I could come up with to every single question they put to the jury pool in the first round of questioning, and I’m pretty sure I came in first place. I figured the more I answered “Yes” to questions like, “Was your grandmother ever held up in front of her own home by a shotgun-wielding thug,” (which is, by the way, true), the higher your likelihood of alarming one side or the other.

“Do you think you can put aside these experiences and judge the defendant fairly, impartially and without prejudice?” he asked.

Dang. The moment of truth. I was hoping he would take one look at all my “yes” answers and tell me to have a nice day, but it wasn’t going to happen. I looked at the judge, who sort of had one eyebrow raised as if to say, “Don’t be the four thousandth idiot who’s come through my courtroom and said ‘no.’ You wouldn’t like me when I’m angry.”

“Yes,” I said. “Yes I can.”

I thought my fate was sealed, but when they impaneled the final jury I was delighted that I did not hear my name after all. Only I don’t think it was because of any great strategy on my part.

I think they just felt sorry for me.

Getting A Fix On The VIX

The continued upward climb in stocks in recent weeks has garnered the lion’s share of media attention. But there was something else that happened Tuesday that was little noticed and yet a very good sign that the financial markets are calming.

Hold onto your hat:

The VIX Index closed at a reading of 28.80!

Shazam!!!

Are you okay? Are you gasping for air?

“All is well,” you say. “Hat on. Air in. Why do I care about this ‘VIX Index’?”

I’m glad you asked…

The “VIX Index” is a gauge of volatility in the options market that many folks (myself included) believe is a very accurate indicator of investor fear. Historically the VIX has hovered between a range of 10 and 20 when the stock market is in a low-volatility environment. A reading of 30 or more has usually indicated “extreme volatility” in the market and has been accompanied by major world crises.

For instance, the VIX hit a record high of 45 in 1998 during the foreign currency crisis that swept Asia. It hit that same record high again in 2001 after the 9/11 terrorist attacks. It twice hit the mid-40s again the next year, during the summer of 2002, when global stock markets plunged following the frauds-turned-bankruptcies of WorldCom and Enron. Prior to the fall of 2008, those were the only four times that the VIX had crested 40 in its 18-year history, and in all four cases the stay above 40 lasted only a few days.

So, if you want to know just how wild-and-wooly things got this past fall, consider this: In mid-September, the VIX Index shot above 40 following the failure of Lehman Brothers. Only this time, it continued to climb like a rocket through the rest of the month and into October, peaking at an intraday high of 89 – eighty nine! – on October 24, 2008. All told, the VIX stayed at or above 40 for more than six months, not falling below that threshold until early April.

Now, if you are a dyed-in-the-wool contrarian, you can’t get enough of the VIX at 89. That is a great indication that investors are letting their emotions guide their investment decisions as opposed to logic and reason, and that is historically a great time to buy stocks at firesale prices.

But there is also a case to be made for too much of a good thing, so forgive me if I enjoy a little moment of glee that the VIX has fallen below the good ol’ traditional 30 reading for the first time since Lehman Brothers collapsed in September and sent a Category 11 hurricane through the global financial system.

Opportunity is nice, but it’s also nice to exhale every once in a while…

Why Billy Mays Makes Me Feel Good About America

My favorite new TV show – and I don’t get to say that often – is a program airing on the Discovery Channel called “Pitchmen.” It is a reality show that follows the exploits of the two highest profile “As Seen On TV” carnival barkers – Billy Mays and Anthony Sullivan – as one budding inventor after another seeks to convince them that they have an invention worthy of the hosts’ prodigious pitching skills.

Part of the reason I love the show is that – true confessions time – I have a weakness for infomercials, as evidenced by the five “Topsy Turvy Tomato Tree” planters I have hanging in my backyard.

 

(Actual, un-retouched photo of my Topsy Turvy Tomato Trees)

The truth is I love a good, quirky product that solves a problem I never knew I had, and in the scheme of things what’s $19.95 (plus $9.95 shipping and handling) to see if, say, the Ginzu VIII knife will really cut through the front left quarter panel of my Audi and still be able to julienne my carrots? My wife once physically removed the phone from my hand as I was preparing to order a Styrofoam glider with a six-foot wing span that, Billy Mays assured me, would fly more than 500 yards if the wind was right. (The first step, she told me gently, is admitting you have a problem…)

So “Pitchmen,” for me, is a guilty indulgence – the curtain pulled back on the whole kitschy “not available in stores” product world that depends greatly on me to keep it profitable. But, on a deeper level, I have also found it a bit of pure inspiration about our great country during a time when it seems like all we have to talk about is doubt and despair, TARP and TALF, bailouts and bankruptcies.

This week’s episode, for instance, featured a 17-year-old, pimply faced teenager from a financially strapped family who had invented “The Spot Sucker,” a little device that literally sucks a stain right out of your shirt. There was also a woman who had invented a new miracle rub for her (and our) dry, cracked heels. In a prior episode there was a guy who had quit his job and mortgaged his house to fund development of his amazing new shoe insoles made from his secret miracle gel. And these are just the few who actually made the cut; there are dozens more inventors we get brief glimpses of who are never profiled on the show.

None of these products are going to solve our dependence on foreign oil or the melting of the polar ice caps. But that doesn’t diminish the drive and determination and faith of the people who invented them: Mortgaging your house is mortgaging your house, whether you’ve invented Mighty Putty or cold fusion.

To me, this is all emblematic of the essence of this country that is constantly bubbling under the surface, away from the spotlight and the news cycle. It is our heritage as a nation that was founded on new ideas, and our right – even obligation – to see our ideas to fruition in accordance with the amount of risk we are willing to take and the ingenuity we bring to the effort.

Consider that a mere ten years ago there was no Google, no IPod, no Facebook. We watched our favorite TV programs only when they aired and sat through commercials because we had no choice. Fax machines were more essential than email, and satellite TV seemed like an exotic fad, not a threat to cable’s monopoly.

The advances we have made in the intervening years are all the result of people who were hard at work behind the scenes, striving to keep the ball rolling forward. They were innovations led by people who didn’t let economic crises and the malaise of conventional wisdom keep them from pursuing their dreams. A new generation of those same folks is hard at work today, out of the limelight. They aren’t seeking bailout money to keep their aging, hulking enterprises afloat. They are seeking seed money so that they can be unleashed to revolutionize the world and show people what they’ve got.

America is full of such people, and their impact on our future goes virtually unconsidered by the supposed experts. When the talking heads opine about diminished expectations for future corporate earnings and economic growth, they are looking only at things as they are today, with no way to see what is yet to be. Who, in 1999, would have predicted that Google would earn more than $15 billion in 2008? No one, because it didn’t exist. And yet here we are, using that search engine so often that “Googling” has become a transitive verb in our language.

So the next time you find yourself rolling your eyes at the latest Snuggie infomercial, remember that it is much more than a bathrobe worn backwards. It is also a campy representation of the driving entrepreneurial sprit of this country that is always hard at work on products of far greater significance to us than fleecewear.

(P.S. — For the record, I do NOT own a Snuggie.)

What Does A Natural Gas Discovery Teach Us About Successful Investing?

One of the notions I raised in “The 12 Investment Myths” is the fact that we are so much more attuned to the world’s problems today because of instantaneous, never-ending news transmission. Things that would have been inherently unknowable to us a century ago – like, say, the fact that 500 people in a world of 6 billion have swine flu – are now brought to our consciousness and kept there for us to worry about day and night until the media gets bored and moves on to the next potential calamity. In today’s wired world, we not only have to worry about our own problems; we have to worry about everyone else’s, too.

The sheer volume of distressing, negative information we have to process on a daily basis robs us of our sense of optimism about the future. This, in turn, makes it exceedingly difficult to be a successful investor, because investment success is about faith in the future. We have to have faith in the ingenuity of the human race to solve problems even when no answer seems present.

This thought came to mind while I was travelling over the weekend and my colleague showed me a Wall Street Journal article detailing the recent discovery of one of the world’s largest natural gas deposits in northern Louisiana. This discovery, along with several other recent finds, has turned the U.S. energy industry on its head. Here’s an excerpt:

A massive natural-gas discovery here in northern Louisiana heralds a big shift in the nation’s energy landscape. After an era of declining production, the U.S. is now swimming in natural gas.

Even conservative estimates suggest the Louisiana discovery — known as the Haynesville Shale, for the dense rock formation that contains the gas — could hold some 200 trillion cubic feet of natural gas. That’s the equivalent of 33 billion barrels of oil, or 18 years’ worth of current U.S. oil production. Some industry executives think the field could be several times that size.

Huge new fields also have been found in Texas, Arkansas and Pennsylvania. One industry-backed study estimates the U.S. has more than 2,200 trillion cubic feet of gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand.

The article details how new drilling techniques in recent years have made the extraction of these gas deposits feasible, and how the energy infrastructure will now be shifting increasingly toward harnessing natural gas as a “bridge fuel” we can use as we work to wean ourselves off foreign oil dependence.

These are good things to remember as the next time we are wringing our hands over Peak Oil Theory and catastrophic predictions of $400 a barrel oil. It is also a great example of the fact that, while we all know what today’s problems are, we can’t know where the future solutions will come from – and yet, inevitably, those solutions come along. Those who let the media diminish their faith in the future, and alter their investment strategy as a result, will be the ones who really suffer.

Poor Performance AND Higher Fees? Where do I sign up?

Some times, I must confess, I worry that I will run out of things to proselytize about.

What if retail fund companies suddenly find a conscience and start actually lowering fund fees? I ask myself, wringing my hands.

What if all those active managers who get paid high fees to beat the market actually start beating the market?

What will I do if I have no more windmills to tilt at? No more demagogues to, um, debunk?

And then I open the paper, and I realize everything is going to be okay because, in fact, I’ll never run out of material. Thanks, Wall Street!

Yesterday was one such day, because two different articles crossed my desk within an hour of each other that were so serendipitous – from a writing perspective – that I fairly chortled (i.e., chuckled and ortled simultaneously) at the timing.

First to come to my attention was the latest “SPIVA” report from Standard & Poor’s comparing the performance of actively managed mutual funds to their market benchmarks (click here to see it). According to the report, 72% of large cap U.S. stock funds failed to beat the S&P 500 for the five-year period ending 2008. Seventy-two percent!

Ah, but what about the other segments, like midcap and small cap and international and emerging markets? It is in these less-efficient areas of the market, the active managers tell us, that they really add their value!

Which, according to the SPIVA report, is true – if, by “value”, you mean “charged even more to perform even worse”:

Fund Category               Percentage of Funds That Underperformed Index
Midcap                                                                 79%
Small Cap                                                            85%
International                                                       84%
Emerging Markets                                               90% 

Given that the fees for the average actively managed stock fund run about seven times those of the typical S&P 500 index fund, one has to wonder what, exactly, one is paying up for? It apparently wasn’t to avoid the worst bear market in a century, because the vast majority of funds actually made things worse for their investors than the market. Perhaps it was for their managers’ nice suits. (This is what we call a “segue”.)

Those suits (see?) sure must be expensive, because the very next article I read an hour later was from an investment industry trade publication that said – and I am not making this up – that fund expense ratios are expected to go up this year. Up!

It’s all very simple, a fund industry spokesman in the article opined. It costs money to run a fund, so when assets decline, the expense ratio goes up.

This is where Mr. Fund Industry Spokesman wants you to take off your thinking cap and go back to watching American Idol. But I would like you to keep it on for a second and ask yourself this:

What is it about actively managed funds that make them so much more expensive to operate than index funds?

Right – the fund manager and his research staff. MBA’s one and all, each with MBA-like salary requirements.

These are, of course, the very same folks who are underperforming those index funds in markets both good and bad. And then, when you hit one of those bad markets – just when you want those active managers to really help you out – their expense ratios go up, which makes your performance even worse!

Kind of reminds me of the fraternity initiation scene in “Animal House”:

“Thank you Wall Street! May I have another!”

Just How Objective Are Those Market Naysayers?

Yet another article I ran across in the financial press yesterday contained lots of quotes from investment types warning us that this is yet another “head fake rally” (there goes another cliché, by the way) for stocks on our way back down to new market lows that are JUST ABOUT TO BEGIN ANY MINUTE NOW! Never mind that this is the same crowd that was telling us this four weeks ago, when the market was 20% lower than it is today.

Now, far be it from me to predict short-term market movements. That is one of the fundamental keys to investment success – realizing no one knows where the market is heading in the short term. I don’t know any more than you do about whether we are in a true bull market or a, um, fake bull market, nor does anyone else. So when people go on record with emphatic statements about what the market is going to do in the weeks and months ahead, I think it is only fair to examine their motivations.

For example, one of the naysayers in the article was a money manager who presently has 100% of his clients’ assets in bonds. I don’t know about you, but I would not exactly consider him to be the Voice of Objectivity right now about the stock market, because if we are indeed in a new bull market, then he is, to put it succinctly, up poo creek without a paddle. Imagine the market gains another 20% in the weeks ahead, and he’s still sitting there with an all-bond portfolio. Is he going to get in the market then, and tell his clients not to worry about the 40% gain in the market he missed out on? Not to mention the fact that if inflation starts building as many expect, his all-bond portfolio is going to get clobbered.

So if you ask that man right now his thoughts about the stock market, he is going to look you in the eye and tell you with complete conviction that you would have to be a fool to be in stocks, because he desperately wants to believe it. Otherwise he will soon be out of a job.

I would imagine his bedtime prayer goes something like this:

“OhpleaseohpleaseohpleaseohPUHLEEEEZ don’t let the stock market keep going up! PLEASE! If you make it go back down I PROMISE I’ll get back in! I PROMISE!”

Such is the fate of those who try to predict the short-term direction of the market – amateur or professional. You end up consigned to hope, conjecture and prayer about things that are beyond all of our control.

Far better to bet on the long term success story that is the stock market and leave the guesswork to those who have backed themselves into such a corner that guessing is all they can do.