Is this market making sense to anybody besides Buzz & Batch? Let's parse the text of legendary trader Stanley Shopkorn as presented in this morning's Journal. Shopkorn, who has probably out-traded 99% of the people on this planet, had this to say about his departure from Moore Capital, one of the best hedge funds going: "The market isn't responding to what it normally responds to, like the Fed aggressively raising interest rates. The volatility in the market has also increased, both up and down, and the normal corrections one might expect take place very quickly or just not at all."
What Shopkorn is saying, of course, is that the market should go down not up, but the buyers don't seem to be acting rationally. How should we interpret this judgment? One way to say it is that things have simply changed. The market is now dominated by individuals and mutual funds that think equities are the only place to be, irrespective of the backdrop, because all other investments stink, and stocks can make you rich. Hey, what's so wrong with that? They have! The second way is to say that Shopkorn got beaten by the Buzz and Batch crowd that think that everything Shopkorn says is negative and just plain irrelevant: interest rates, earnings, Greenspan, inflation. Buzz and Batch believe these have nothing to do with technology investing, which is in its own world, a world that is rapidly overtaking the rest of the trading world. Buzz and Batch never sell unless they get a margin call. They scheme to keep stocks up and create false breakouts and terrific charts. They beat up analysts not to downgrade stocks and they wield their hefty commission dollars to back up their points. They only have black tickets in their hands. (That's slang on Wall Street for buy tickets.) Buzz and Batch don't keep cash on hand and they don't raise cash. They think that half-point raises in discount rates are meaningless attempts by the old regime to try to rein in something that doesn't really exist: inflation. Most of all they know that if they fail at the Hot Hot Hot mutual fund, they will just pick up and go to another. They are on TV for being up 100% last year. They will get the money. And they are idiots. In the end, I don't know what makes the market change. I do know that the Buzz and Batch types are driving a lot of the grizzled old vets out of the business. Seems like they bite the dust once a week these days . Very sad.