It's choppy out here--but the sun is shining, the water is beautiful, and the fish are biting! But before I lose a signal, this thought came to me, as I saw that China was down again today.
In February, of 2000 I needed some mulch, and I threw a couple bags in the front seat of my Porsche on the floor, and took them home. After I tossed the bags out, I noticed the front seat was still full of mulch pieces, and I said to myself, that I needed to go and get another vehicle.
So I stopped at the neighborhood Cadillac dealer, and looked at these giant Hummers, and decided to pick one up to haul mulch around. And then I said to myself "WTF?"
How is a Hummer an impulse buy to haul mulch around? Doesn't that mean money has been made too easy?
I said screw the Hummer, went home, and I sold everything the next day, just too clear my head. Sometimes, for traders, you have to take all the money off of the table, just for the cathartic response that it gives. And don't think a bit of that isn't happening on Wall Street--but it's not a mulch moment, or a Minsky momement either! After all, who is financing speculation now?
Anyway, in the vicious bear market that followed, my mulch moment, I only lost about 3%. After dumping everything I just traded very light. I didn't make any money over the next couple of years, but I didn't get dinged, even though I was still spending like it was the 90s. (Now I didn't talk about the latest bear market, because I got smacked around in that. Why bother bringing that up?)
Now last night, I wrote a recap piece, but don't think that I don't know that bull markets make bulls look like geniuses, just like vicious bear markets make the most strident bears look prophetic. So all you bears that think that will mark some major top in the market, please, just put those thoughts to rest. That only happens to bears. What do you think--that I'm going to have another mulch moment?
You only get one of those! That's why the story is good!
Which is why, on the day it happened, on April Fools, when David Rosenberg turned bullish, by trying to be "tongue in cheek" and dripping in sarcasm, I pointed out the folly of his arrogance.
But the scars of the last bear market, aren't felt by those under-invested. They're just worried about matching their index. They're worried about performance anxiety!
And that's what makes me think that this is just some choppy waters, and not some major top that everyone seems to want to tout.
Traders will move in cash, just to clear their head--but the big money? They can't make that impulse decision, like you and I can--that's made by committee.
Even though some folks just want to sell, just to enjoy their last weeks of summer!