This market is driving more than a few people crazy. It just won't play by the old rules -- it makes up its own rules as it goes along. The old rules are tricky and very difficult to master. In fact, they can't be mastered, but with a lifetime of respectful study and reflection, it used to be possible at least to coexist with them. They had an orthodoxy and a timeless grandeur that rang of truth.
But in the Church of What's Happening Now, those rules count for naught. Now it's peer pressure, crowd logic and the endorphin high that comes from sheer exertion. More than a few old-timers are going a bit nuts reading the old book in the new church.
Bob Barbera is apparently one of them. He is chief economist at
and a widely quoted Wall Street savant with the painful stripes that come from having made wrong calls before -- but with the hard-earned experience and long tenure that is the result of a lot more correct calls.
His most recent letter to clients made me laugh, rather ruefully, and I asked permission to reprint it. He generously granted it because, you see, Bob and I tend to see the world through nearly the same set of lenses. We may have been separated at birth. We read fishing magazines at my house, but Bob was raised on
The Wall Street Journal
. Fat lot of good that did, huh, Bob?
cri de coeur
Dear Dr. Freud, Thanks for seeing me on such short notice. I guess I should confess at the outset that I've never done this before. Italians traditionally go to confession. But I figure if Tony Soprano can whine about the emotional stress he feels as he blows people's brains out, then I can bend your ear about anxieties I have been feeling as a Wall Street "talking head." For nearly 20 years, Doc, I figured I had the best job in the world. I get paid for staying on top of what's happening around the world, and for declaring once in a while that I see important change on the horizon. It's hard to describe exactly how I come by my views. I read a great deal, I pore over data and I talk, nearly nonstop, with clients about the world around us. Being highly compensated for staying well informed and venturing forth with opinions -- as far as I'm concerned -- was the best of all possible jobs. Until now! You see, Doc, all of a sudden I'm trapped by the images I see when I gaze into my crystal ball. The best part of my job is when the light bulb goes on above my head and it dawns on me that the world is about to change. That's when I weave together a story about how investors can position themselves for what's on the horizon. Whether standing at a podium, sitting in a conference room or cradling a telephone, I'm invigorated as my logic and enthusiasm capture my colleagues' attention. And if, over the ensuing quarters, my guesswork proves prescient, then I get the exhilaration of having been right about the changes that arrived on the economic scene. But, Doc, what do you do if you don't like what you see? Worse, what do you do if your image of the future is retrograde, old school and ugly, and it stands in stark contrast to an overwhelmingly wonderful brave new world of the here and now? What do I do, Doc, if my vision casts me in the role of Cassandra? There I am, at the podium, weaving my web, waving my wand, working my magic in an effort to win the audience over. But who in their right mind would want to convince a group of his peers that things are not really that different, and that old fears are indeed well founded? And, Doc, I wish. Oh, how I wish I could believe. Life would be wonderful for me now if my crystal ball conjured up a picture of enduring perfection. Let's face it, Doc, it may be me who lacks the vision. I just didn't have the foresight to quit college, start a firm and earn $250 million before I was 30. I got a Ph.D., taught at MIT, worked in Washington and on Wall Street and, at almost 50, I've discovered that I've been in the slow lane for all these years! So who knows, maybe the dark color of my crystal ball is nothing more than the reflected hue of sour grapes. Maybe a short list of soaring shares and a surge in margin debt and a grimacing Fed chairman are all irrelevant. Maybe the old rules are for people like me, old fools... But, Doc. Doc, when I wake in the middle of the night, my nightmare is always the same. It's Lucy, Doc. And I'm Charlie Brown. It's Lucy. She's holding the football. She's promised everyone that this time she won't pull it away. And she told the truth, Doc, to everyone else. She purrs that I'm the last to believe that in the new world, things can be counted on to be better than expected. Come on, she says, don't be the only one who hasn't shed his anxieties. She wants me, Doc. Me ... the Charlie Brown of Wall Street. She wants me to conquer my fear. She wants me to run toward the football she balances below her finger. She wants me, in full stride, to unabashedly kick the football through the uprights and join the crowd of believers. And I hem, Doc, and I haw. And I twist and I turn. But the crowd grows more restless, and her gaze is enticing, and I want oh so much to be one with the happy campers, back amid the bullish who believe. And so I go, I run, I do it, full speed, no fear, it's only right, why be a doubting Thomas. And so I swing my leg, full out, and almost see the ball splitting the uprights as it soars in the air. But, no. My leg kicks harmlessly through the empty air. Lucy cackles, football in hand. The crowd has disappeared. She's laughing as I lie on my behind. And there I lie, and then I mumble, Doc, I mumble. It's always the same, I just mumble, quietly mumble: "But Lucy, you promised that it would be different this time."
I feel Bob's pain. I too know what it's like to be among the 10% who didn't get the word. But people like that may be the true heroes of this market. Markets tend to turn (yes, this is according to the old book) when the last buyer or seller is in. This market needs holdouts, skeptics, to sustain itself. It may become dangerous when the last infidel has been converted. Did you see the column in
The Wall Street Journal
on Friday? It was headlined "Conservative Investors Are Saying: Maybe Tech Isn't a Fad."
You must have seen it, Bob. I was reading fish stories.
Jim Griffin is the chief strategist at Hartford, Conn.-based Aeltus Investment Management, which manages institutional investment accounts and acts as adviser to the Aetna Mutual Funds. His commentary on the financial markets is based upon information thought to be reliable and is not meant as investment advice. While Griffin cannot provide investment advice or recommendations, he invites you to comment on his column at