Plains, Trains & Dental Hygienists
NEW YORK -- Problems with travel, technology and my teeth (not necessarily in that order) robbed me of precious reporting time in the past 36 hours. Instead of making something up (like usual), I'm going to share a comment from
, who compared the stock market to a car that's been broad-sided and is currently swerving in slow motion toward... something?? Presently, it's trapped in one of those super slow-motion moments from movies starring retired football players-cum-action heroes. (I'm paraphrasing here, but you get the point.)
In the category of "there's no such thing as an original thought," on
May 10 Robert Christian, chief investment officer at
, compared the market to a car traveling at 140 mph that had to swerve in order to avoid hitting a deer. The
"is still careening down the highway and trying to figuring out how to make the car stop," he said at the time.
Taking the car analogy to its legal limits, it seems to me the speeding market vehicle got broadsided in March, then clipped by a truck in the next lane in April. Just as it was righting itself in September, the market slammed into several large mammals masquerading as higher oil prices, the sinking euro, third-quarter earnings warnings, and the overall slowing of the economy.
That left the marketmobile spinning until it blew a tire and flipped when it became clear we wouldn't know the victor of the presidential election anytime soon. Now investors watch in horror, waiting to see whether the vehicle makes a "miracle" stop safely on the shoulder and gets rescued by Big Al's towing (as in
, or the guy who owned the island). Or plows into a tree, jumps the divider and slams into an oncoming truck. Or goes caroming off the road down a ravine and explodes into flames.
Whatever the ultimate outcome, the occupants are still struggling to regain control.
Today, the Nasdaq fell 0.2% to 2871.45, unable to sustain an early rally to as high as 2921.80 amid concerns about
earnings, a profit warning by
which weighed on chip makers such as
, and continued weakness in
The "good" news is the Comp didn't fall further -- buoyed by strength in heavyweights
. The bad news is the index was unable to mount any comeback from yesterday's 5% shredding, despite expectations for a pre-turkey rally.
Dow Jones Industrial Average
rose 0.3% today and the
gained 0.4% amid strength in biotech, telecom equipment and financial names, as well as a host of defensive sectors, including precious metals (for which longtime readers of this column know I have a soft spot). The
Philadelphia Stock Exchange Gold & Silver Index
rose 3.5%, suggesting (perhaps) recent market action, political uncertainties here and in Japan, as well as the continued unrest in the Middle East, are prompting investors to turn to the oldest of safe havens.
Finally, don't let the pundits tell you that people are "sitting on the sidelines" because of the pre-holiday mood, or postelection morass. More than 1.1 billion shares changed hands on the
New York Stock Exchange
today, 6% higher than the average daily volume for the past three months, according to
. More than 1.7 billion shares were exchanged in Nasdaq trading, far from a record but far from chopped liver as well.
GuruVision: A Day Late, A Few Dollars Short
In a nutshell, the big strategists remain bullish, although they seem to be reining in their enthusiasm this week.
strategist Jeffrey Applegate -- as you no doubt heard -- issued a "mea culpa" yesterday in which he lowered earning estimates for the S&P 500 and admitted that his bullish stance this year, particularly on growth stocks, now looks "awfully stupid."
Second, Thomas Galvin at
Credit Suisse First Boston
wrote: "Investors may continue to sit on their hands and cash until they see proof that concerns regarding profits, politics, inflation and liquidity pass."
That may be the understatement of the year, but it's a tacit acknowledgement by Galvin that being bullish hasn't been the right approach.
Still, it's not so easy for these gurus to change their horns.
Applegate left unchanged both his recommended equity allocation of 80% and expected equity return of 12% for 2001. Galvin wrote "defensive money currently in cash, money markets and value stocks will ultimately provide a liquidity boost to help drive growth stocks higher."
It's starting to become obvious that nobody has a clear focus on the "big picture" and market conditions dictate GuruVision should in the future narrow its focus to specific stock picking. In the coming weeks and months, that's what will really separate the gurus from the chaff.
Reader Feedback, Part 1
To readers who dismiss Don Hays, featured here
Friday, as a "permabear" who embodies the old adage about a broken clock being right twice a day, I submit the following:
On Aug. 5, 1982, Hays issued a report titled "Bells are Ringing," in which he hailed the arrival of a "super-cycle bull market." Hays said via email he battled the permabull moniker from that point until April 1998, when he began turning defensive.
Furthermore, he hasn't been doctrinaire since turning bearish in April 1998. On Sept. 5, 1998 he recommended a fully invested position, which remained unchanged until early 1999. At that time, he recommended investors start scaling back their equity allocation.
So, yes, he missed the huge blow-off rally in late 1999/early 2000 but did turn short-term bullish again in May 2000, predicting the Nasdaq would rally back from its (then) lows around 3000 to as high as 4200. The index peaked (intraday) on Sept. 1 at 4259.
On Sept. 18, Hays issued a report called "Sign of the Bear," whose title speaks for itself.
I'm not trying to lionize the guy. The point is we should all be as "wrong" as Hays has been.
As for right now, Hays said "we are within 6-8 weeks of a significant buy signal that could produce 20% gains in the following six months."
But remember, the strategist is expecting the Comp will fall as low as 1800 before that buy signal emerges. And he believes the 20% gains to follow will be in prelude to the "third phase of the bear market."
Reader Feedback, Part 2
I'm currently preparing the annual
Turkey Awards piece, hopefully to run tomorrow, and am taking a little different approach this year. First, I'm shying away from individual stocks because so many have gobbled this year, preferring to focus on big themes. Second, I'm reaching out to the readers; please chime in via the following poll. As always, feel free to email other suggestions.
The Turkey of the Year Award Goes to...
The Gospel According to Growth Stocks
Trading on Margin
As originally published, this story contained an error. Please see
Corrections and Clarifications.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to
Aaron L. Task.