-- Kim Kardashian
Keeping Up With the Kardashians is an American reality TV series that has been on the E! network since 2007. The series focuses on the professional and personal lives of the Kardashian-Jenner family, with emphasis on the Kardashian women: Kim, Kourtney, Khloe, Kendall, Kiley and Kris. Most recently, Bruce Jenner (who is undergoing a gender transition) has been a series focus.
Keeping Up With the Kardashians takes the "famous for being famous" concept to a new level. It appears that the core appeal to many is the outrageous stuff that comes out of Kim's and the others' mouths, which is actually occasionally funny.
"Even when you think something about the Kardashians could be interesting, it's not."
-- David Hinckley, New York Daily News
To me, Keeping up With the Kardashians is a metaphor for the market, as the popularity of both are foreign to me, and the story lines often seem fabricated. At times, the series (consisting of a group of desperate people doing little) seem to be like Mr. Market, consisting of a bunch of theses woven together in an attempt to climb to the margins of fame and to new records.
Promotionally minded, Kim Kardashian (the series' central focus) reminds me of Tesla's (TSLA) Elon Musk, another master of boosterism, and even to the bubble in private-equity startups in technology and social media that exists today.
I watched this season's Keeping up With the Kardashians first episode last night, and I remain dumbfounded by the appeal. In the same manner, I am stupefied by the market's advance over the past 12 months.
Last week I published Paul Tudor Jones' 13 rules. The most relevant one, and reflective of where we are in the bull market cycles, is this one:
"There is no training -- classroom or otherwise -- that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it."
Paul Tudor Jones is not a man to fade after decades of delivering superior investment returns. His are such good words of advice.
I continue to hold to the notion that the market is in the process of topping out (conceivably, like the Kardashians' popularity) -- perhaps in a major way -- and that we are in the eighth or ninth inning of the bull market advance.
As Paul Tudor Jones extolls, there is often no or little logic to the last third of a bull-market or bear-market move. Jones suggests "living it." I suggest trading around it.
I will guarantee to all of you that when historians look back at this investing period (and Keeping Up With the Kardashians) -- the bad-news-is-good-news thesis, the unparalleled role and confidence in the Federal Reserve, the buy high mentality of corporate share buybacks, the multitude of developing malinvestments, etc. -- they will admit to how stupid investors were to have bought in.
I maintain the view that there is a limited margin of safety in equities today, and while no one knows (with certainty) where Mr. Market and the global economy are headed, I am convinced that the following additional 12 key "big picture" factors could weigh on markets and on the real economy over the balance of the year and into 2016:
- Multiple and unpredictable outcomes: There have likely never been in history more numerous market and economic outcomes, some of which are adverse and most of which are being ignored by market participants.
- Stuff happens: Black Swans appear to be happening with greater regularity.
- Weak growth ahead: Central bankers' aggressive monetary antics have only produced subpar global economic growth.
- Borrowing from the future: Zero interest rate policy (ZIRP) has borrowed past and present sales from the future, underscoring the challenge of future economic growth.
- Unknown consequences of policy: No one knows the consequences of an extended period of ZIRP "punch bowls," often resulting in aberrant behavior and hangovers.
- Making no sense: Indeed, if there were no consequences to zero interest rate policy, interest rates could have been held at zero forever -- in the past, as well as in the future.
- Stop looking up, start looking down: Monetary overkill (in duration and in the level of interest rates) may produce the adverse consequences of malinvestment. It has resulted in the hoarding of cash and reduction in spending by the disadvantaged savings class.
- Uneven and less dependable growth: The "exclusive prosperity" of the haves (vs. the have-nots) is politically unstable, leads to more uncertainty (and unexpected outcomes) and will likely have a negative and more volatile impact on our social system, on the global economy and on our markets.
- Tom Friedman has the ticket: Our world has never been more flat, more networked and more interconnected. As such, the notion of an "oasis of prosperity" is not likely rooted in fact.
- Trouble ahead, trouble behind: Terrorism and religious radicalism (political and economic) will be more of a threat in the future than in the past.
- Treacherous technology: In a paperless (and "cloudy") world, investors and citizens are not likely as safe as the markets assume.
- Lack of coordination: Geopolitical coordination is at an all-time low and isolationism seems likely to be a mainstay in the time ahead.
Being in market-neutral mode for a while, I have again been taking baby steps on the short side in the past week and I start the day net short, with my preferred vehicles in risk-defined SPDR S&P 500 (SPY) puts and in a medium-sized SPY short.
One last thing -- did I mention that I plan to watch the second episode of Keeping Up With the Kardashians tonight? Who knows, like bank stocks the series might actually begin to grow on me!
"If I had known better, I would have done better."
-- Kim Kardashian
Originally published at 12:00 p.m. EDT on May 18, 2015