Bullish, No Matter What, Part 2

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You would think that if this were the "bigs" somehow, Grant would be farmed down to the minors, washed up, never to be heard from again. However, like politics, the media needs to present both sides of the story, and Grant still plays the willing bear role, regardless of the data, regardless of the time, regardless of the facts. Because it's his role. We accept it. Somehow the media thinks it is legitimate.

Me, every time I pass those steps on the way to work I'm reminded of just how outrageously wrong Grant was -- especially about Korea -- and how he was just playing the part of the bear. It's not an act. He believes. It's just politics, and, I guess, good business given that he has a newsletter to sell.

These days Grant is in rare "I told you so" form and I find that to be beyond painful because I would have sold, rather than bought, the last buying opportunity on the way to Dow 11.900. And if I had done that with your money, believe me, I would have had to find another line of work by now.

To me, Cohen and Battipaglia are now playing the anti-Grant roles. It doesn't seem to matter what their data say or where prices go, nothing has happened except that we have elongated the timeframe to Nasdaq 6000 or to much higher levels on the S&P 500. The push-out in time for these bulls is no different from the push-out in time for Grant in 1997. When we get there, if we get there, Cohen and Battipaglia will be right. Until then, the jury is out.

But that's ridiculous because while the jury was "out" you lost fortunes and continue to lose fortunes taking heart that one day Cohen and Battipaglia will make it back for you.

In some ways these two are even more intellectually dishonest than Grant, because they say what we want to hear. At least Grant plays a role that most people would shirk as basically un-American, the role of the pessimist who sees no opportunity.

By the way, those who are waiting for an attack on Bill Fleckenstein here, I say, "No way, buddy." When I first started hearing about Bill, he was a huge bull on many of the companies in the semiconductor industry, to the point of being an original investor in KLA Instruments and loving many of the names he now disdains. In addition, there have been whole quarters, whole years even, where Fleck has sided with me short term about long-side opportunities. He has no desire to be blind to the direction of the market; his time frames know delineation.

What's the right course? What makes the most sense when it comes to investments? I, for one, think Byron Wien at Morgan Stanley has this figured out better than anyone. He uses earnings and interest rates and figures out whether the market is overvalued or undervalued. No matter how much he likes the market, he will not tell you to buy it if his work says the risk-reward isn't there. He does not come up with new excuses about why his valuations don't work and he does not try to invent reasons why he likes the market. He is flexible. He is trying to be right more than he is wrong. He is trying to make you money, not explain a bullish ideology. He is not a politician. That's why I always seek his guidance or the guidance of his associate, Steve Galbraith, at crucial moments when I am anxious to commit large amounts of capital. I want my decision-making blessed by Wien's rigorous model. Wien's model typically favors the asset of least risk, most reward, even if that model recommends cash for a substantial component. (Cohen's has a cash component, too, but I think that is nullified as an option by her strong rhetoric in favor of equities at any cost.)

Part of my screed against these perma-bulls is based on their lack of humility about what has occurred and the wrath that this market has visited upon the majority of stock investors. But some of it rests more on what I know will inevitably happen: One day the market will go back up again and Joe and Abby are going to be high-fiving and acknowledging that they, alone, got you through the tough times.

The job is not to get you through the tough times. It is to avoid them, sidestep them, and wait for better times. That's called investing. It's something I am good at. I want you to be good at it, too. Listening to perennial bulls or bears might, at times, be entertaining, and at times painful even, but it is no more right than a broken clock. Twice a day you are a genius. Except when the clocks move forward, like this weekend. Then you aren't even right twice. That's not a record with which to aspire.

Random musings: The Action Alert roundup and a snapshot of the portfolio that I'm creating with my personal money, featuring bases and unrealized profit and loss, will now be available only on Saturdays, not Fridays. That gives me more time to reflect on what I'm doing, away from my screens, which is how I want to invest from now on.

To return to Part 1, click here.