Why does the phrase "timing is everything" resonate when applied to stand-up comedy and meeting the love of your life, but is smirked at by "financial advisors.”? Don't try to time the market, they insist. Yet, when to buy or sell is the only advice we want.
The “lost decade” for equities flies in the face of the stocks-for-the-long run crowd. Rob Arnott, an analyst recently roiling the advice waters with a study in a financial journal, is persuasive, not because he produces data that show bonds beat equities for 40 years, but because Kev thinks he actually makes a case for picking equities now and going to cash when inflation kicks in, which it surely will. A tricky move, sure, but there's no other way to make dough during one's investing lifetime. In the long run, the sun will burn itself out and the earth will become a frozen ice ball. Before that happens, you can buy low and sell high, or at least try. Otherwise, just stuff it under the mattress. Not that there’s anything wrong with that if you’re so inclined.
Yesterday Kev was faced with a long par 3 over water on a course he hadn’t played for several years. Large outcroppings of rocks loomed on the left, his usual landing place when he attempts to put some mustard into his swing, but the temptation was too great. Out came the driver. Didn’t hit the green, but managed a smooth hit that faded to the right. Chipped on and two-putted for bogey. He was pleased. We will spare you the stroke-by-stroke recounting of various 8s and 7s that peppered his score card. Those are the toxic assets he must somehow get off his balance sheet, and he’s confident he will.
But pessimism abounds. Nick Paumgarten’s "The Death of Kings" in The New Yorker this week is a brilliant piece about the meltdown of Wall Street and is recommended reading for Karousing with Kev’s followers, but is far too scolding. Paumgarten is smitten with the doomsayers who saw the catastrophe, to their credit, but expect more catastrophes to follow. It’s as if they insist that only the cleansing of world war will set things right again. A great quote Paumgarten comes up with is “Capitalism without bankruptcy is like Christianity without hell.”
Well, in the purgatory we now inhabit in this life, we are tortured for perhaps several hundred thousands of years, as the Sisters of St. Joseph told us in the second grade, but the good sisters assured that we venial sinners would get out when our time was served. Kev thinks we’ll get out sooner if we refuse to lay up. Go for the green and if you come up short, take a 4.
The week ahead will bring NAHB housing data on Monday, U.S. home starts on Tuesday, FOMC minutes on Wednesday and Philadelphia Fed survey results on Thursday. We all know housing statistics will be in the dumps, but expect a renewed sense of less difficult times.
We believe stocks have room to move higher. The day will come to get out, but not yet. Miss Market is coy but not unfeeling. She has a sentimental streak for the greedy, whom she counts as her soul mates.
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