Uncategorized

DANCING BEARS, TALKING HEADS, SUGAR PLUM FAIRIES, AND WITHERING SNOWFLAKES

Note: I originally wrote and published the following article on December 20, 2016, when the Dow Jones Industrial Average was sinking toward 20,000.

I then reposted it last December when the market was almost 15% higher.

Now the Dow is at 28,455.

Overall, the market is now more than 42% higher.

The article is as true now as it was then.

The article, published just in time for Christmas, was entitled:

DANCING BEARS, TALKING HEADS, SUGAR PLUM FAIRIES, AND WITHERING SNOWFLAKES
by Pericles Elytis Nikitaras
December 20, 2016

We’re getting near the 20000 DOW index mark, and many nervous bears are dancing around proclaiming the bullish market run has run its course.

Let’s not forget that these are many of the very same people who failed to call the last market crash, or any of the prior ones, although some have been so bearish for so long that they now resemble broken clocks, which, even though completely broken, are still right twice a day.

That’s not foresight.

That’s like saying tonight’s weather forecast will be dark, with scattered light appearing toward morning.

Let’s review some of the other genius “dancing bear” calls we have heard in recent years:

• Fall 2016:
“If Trump wins, the markets will crash!” —NY Times economist, Paul Krugman

As Trump would say, “WRONG!”

• Summer 2016:
“Brexit will crash the EU and world markets!”

Dead Wrong!

• Winter 2016:
RBS (Royal Bank of Scotland) infamously declared: “Commodities are done! SELL EVERYTHING!” (at the lows!!!)

A Very BAD move, in hindsight!

• Fall 2015:
“China’s slowing growth (now 6%) is a major concern!” (Who truly thinks China’s explosive 6%+ growth is an issue when US and Europe were sub-2%?)

• Summer 2015:
“Greece default will bring down Germany, the EU and the world economies in domino effect!”

WRONG!

• Summer 2015:
“China is devaluating their money! This is the end!” Wrong again!

These pundits and talking heads are always wrong…Why?

Because so many bears are so arrogantly inflexible and so rigid as to their negative investment strategies, they often fail to read major indices, macro charts or even consult fundamentals like the ISM reports and PMI Manufacturing composites. Both indicate more market and economic strength to come, and if that happens, the bears will take another shellacking.

“It’s different this time,” the naysayers claim. And there they are, folks, the four most expensive words in investing:

“It’s different this time. “

Human nature never changes and neither do fear and greed.

The market always climbs a wall of worry, and sells off on complacency. The higher and louder the whining, worrying and handwringing gets, the higher markets will go, until everyone capitulates and plunges in.

Let’s just say that I’m definitely not sitting in cash or all bonds right now.

I’ve noticed a pretty good market indicator over my career: Even the cab drivers and shoeshine guys want to participate and always ask for ”hot tips” when the markets start getting frothy and reach tops. I haven’t had a cab driver or shoeshine guy ask me for a hot stock tip in a long time. That would be a good sign of capitulation.

We’re not there. Not even close.

As I have always said, while I’ve certainly met a few, poor, I’ll-advised optimists in my 32 years as an economist, advisor and money manager, I have never, EVER met a rich pessimist.

So be optimistic, think, invest, and grow rich.

🎄 Merry Christmas! 🎄

Below is a chart of the S&P500 ETF.

(Updated as of December 20, 2019)

Categories: Uncategorized

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