Second, these new highs are a verification of the notion that there are times when panic is simply not acceptable. It's not only NOT a strategy, but emotions need to be checked at the door. It was only a couple of weeks ago that this bull was pronounced finished, done, with a bearish matador slaying it in front of all of our eyes. I want you, for a moment, to consider investing like war. In war there are broad issues of fighting, strategic issues where fates are in play. Then there are tactical issues where you have committed to a strategy, but you need to execute it in a different way. When the Great Recession raged we had systemic risk in the market. You don't get the Dow Jones Average cut in half, taking it back to levels we saw in the 1990s, without systemic risk, meaning that the whole darned system could implode. That called for a strategy of capital preservation. If you needed the money that was in the stock market for something big, it had to come out. That's a huge strategic goal and I chose that when I thought the risks favored capital preservation over capital appreciation. I guess I could say "famously" chose that because of the opprobrium with which the strategy was initially viewed. But then with the Dow cut in half and the systemic risk taken off the table by the Fed itself, when the chairman said no more banks would be allowed to fail, you had to choose a strategy of capital appreciation. Now, almost 10,000 points later, that strategy is still in play because there is no systemic risk. All of these maneuvers since the bottom are about tactics. Do I trim some of my gains? Do I go with dividend stocks? Do I get more aggressive? These are tactical concerns with the idea that you are still trying to make as much money as possible picking sectors and picking stocks.
Why is this so important? Because the vast majority of the time in this remarkable run I have heard people speak strategically about leaving the market. There have been top callers all the ways. Their strategies have been defrocked and often revealed as just derivatives of panic. Let's reveal them for what they are: people who got it wrong. Don't listen to them next time. They hurt you. Typically they called tops because they didn't like Bernanke's handiwork. Meanwhile, look around. The actions of the European Central Bank before the bottom and of the Chinese right now are what these critics wanted. How'd that work? Why do you think we are the strongest economy in the world? The Fed's policies, and our smart executives who took advantage of them, made that happen.