Flies, Ointment and Black Swans
Feb 9 2012 - Mike Williams - Global Boom Insights
Good Morning.
Nice and chilly here in Chicago this morning. The late winter may still come. Alas, it is likely to meet with a world that is mending even though so many disagree that it has even pulled back from the edge of the abyss.
Fly in The Ointment?
Well, heck, it is not really even a fly...it's a bear. Our favorite end of the world doomsday reconnaissance team has decided, after 6,000 Dow points, that they are bullish on stocks. Of course, they back that up with the all safe prediction that someday, the world is still going to end. Mayan calendar fallback is always a good ploy to jolt fear back into the system.
Brand New But What a List
Let's just think about the still new 2012 market year. It is a mere fledgling 5.5 weeks old but its list of accomplishments if you will is already vast. Let's grab a stiff cup of coffee, 4 Valiums, a small steep off that oxygen mask...and review. In the last 5.5 weeks, each of these events have unfolded:
- The NASDAQ hit a new 11+ year high...except no one came to the party
- The t-bill market went to negative returns - meaning "investors" paid the UIS government to hold their money for 90-days
- Earnings have continued to stumble into all-time new highs
- Profit-margins have joined right behind
- Not to be left aside, cash flows and cash on balance sheets have both bolted into record camps
These things have sadly also happened:
- The 10-year hit a new multi-decade low in yields as money continues to create an avalanche into the product - read "fear" not quality.
- The crowd, through the end of January, continued to sell equity funds...by the truckload
- That same crowd keeps buying the record low yields in bonds
- Surveys show bullishness but no money being invested--that's a trick on your eyes and mind -- and it's working
- Wall Street strategists are flat-footed as their direction on equity exposure--as markets are hitting multi-year highs--stands at near 20-year lows
Anything look wrong to you in this picture?
Think 1982.
Bizarre right?
The news tells us that we should worry about every black swan out there. The spooky little secret is that there are always black swans out there. There is always disaster lurking. There is always the potential for utter failure.
The better news though is that we have spent hundreds of years failing our way to success. You cannot get there any other way. You need to keep climbing, keep getting, keep your wits about you when all are losing theirs and most important....we need to be patient.
When is was out there on the ocean many years ago and squalls blew in and waves rocked us to the edge of life---literally--it was easy to panic. Thankfully, I didn't--or I very likely would not be writing you these notes each week today. Ha-ha, ok, some readers may chuckle.
Alas, it is easy to panic, easy to give in to fear, easy to follow the crowd, easy to fall in line, easy to follow everyone off the proverbial cliff--even if emotionally.
There is just one tiny little problem from which one cannot escape: there is NOTHING about successful investing and building your wealth over time that comes easy. Nothing.
Remember, It's Only Halftime
Like Clint tells us here, forget the political rhetoric now tarnishing a great message for us if we will listen. Take two minutes and watch here. Take the words in, let them seep deeply into your mind.
Then, reread that list above of the events already on the books for 2012. There is a long way to go and a tough road to traverse. But, heck, anything worth giving a reward for belief will not come without a price.
Grab your courage, unlock it from the dark shadows and be bold.
This country - and we as a people - have our best days ahead. We have worked hard....we have paid dearly for this freedom - and the whistle is about to blow.