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Session 21—Whistling Through The Graveyard—Hats off to CNBC!!

It is very rare when I have something nice to say about CNBC. But I do today.  They conducted an excellent interview this morning with Mark Mobius, Executive Chairman of Franklin Templeton Emerging Markets Group…a very credible source.  Becky Quick and Joe Kiernan were extremely differential to Mr. Mobius and his long, distinguished career managing […]

BillA better question might be:  Is it a normal market occurrence and should I be alarmed?  My answers are YES and NO.  I answer this way because a ten or fifteen percent correction, after the run we have had, would be perfectly normal and probably very scary; but not the end of the world.

I bring this up because my daughter has a co-worker who has been reading this blog and said, “If the market crashes, he is going to come and visit me.”

First of all, let me say, as I have said before, my blog is not the divine word of the Lord.  We make mistakes. What we write about is based on five decades of experience with the market, economy, media and politics.  I realize that I have been very constructive in these posts.  My positive view is based in part on the premise that after thirteen years of flat market (point to point), I believe you have a good chance for longer-term positive returns vs. those available in the fixed income markets. To wit, Professor Jeremy Siegel, in his book “Stocks For The Long Run”, puts these compounded annual total real returns in the area of 7%.  This is, by the way, for a period that dates from 1802 to 2006.  This does not mean there were no risks and no corrections.  There were tons over this 200+ year period, including the crash of 1929 and subsequent bear market(s).

 What is interesting here is that if you examine the last most recent flat market period before todays, you would find stocks returned (1966 to 1981)  –0.4% on a real compound annual basis.  Most people had had it with stocks in 1981, just as they have had it this time around.  Equities were a dirty word.  Following that gruesome performance in the next 17 years they returned 13.6% on a compounded total real return basis (the stuff dreams are made of).  Even though higher numbers might be possible, a real (adjusted for inflation), long-term 7% total compounded number still feels much better to me than a 1.77% ten-year U.S. treasury (not adjusted for inflation).

What I am suggesting is that it may be safe to get back in the water.  This does not mean to take all your money and throw it in the market immediately, especially if you have been sitting this one out.  If you don’t own stocks, you probably should begin to piece money into the market over time.  If you do own stocks and are leery about the market based on the happenings of five years ago, you need to view the market, economy and risks through a different prism.  Quit looking in the rear view mirror.  We wrote extensively on this in session 7 “My biases…” It is about inflation and why owning assets may be the best way to protect your money and why lending money (buying bonds—the current safe bet) may be no protection at all.

What’s past is prologue”

Taking the Bard a bit out of context, “What’s past is prologue” in a market sense. That does not mean that the next market blow up, a la 2008, is just around the corner.  It takes time, maybe decades, for things to bubble up to that kind of catastrophe (check out Session 3, “Current Events”), and there are always risks of loss in the short run (if you sell).  In the long run, if Jeremy Siegel’s work is correct, there appears to be a lot of opportunity out there.

So when is the correction coming and how bad will it be?  I haven’t the foggiest.  And neither does the media.  The experts have been calling for an end to this run since the presidential election in November. It just may be good to stop fretting and focus on the potential long-term prize…a reasonable real return…potentially getting rich slowly.

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The information presented in kortsessions.com represents my own opinions and does not contain recommendations for any particular investment or securities.  I may,  from time to time, mention certain securities for illustrative purpose, names where I personally hold positions.  These are not meant to be construed as recommendations to BUY or SELL.  All investments and strategies should be undertaken only after careful consideration of suitability based on the risks, tolerance for risk and personal financial situation.

 

Session 19—CNBC = Shameless

If they gave out awards for trend following, CNBC would be a top contender.  To wit, as the market (primarily the Dow Jones Industrials) began its run of new all-time highs at the end of March, CNBC began running the following promo, using clips of its various on–air persona; Sue Herera—“History in the making for […]

Session 17—“Risk On, Risk Off”….Dumb Stuff

If there is anything that I see or hear from the media that absolutely pushes my buttons, it is the expression “Risk on, Risk off.” The saying derives from the 1984 movie, “The Karate Kid.”  In the movie a young New Jersey kid (played by Ralph Macchio) with an attitude and accent moves to the […]

Session16—Cyprus—A Media Measured Response…Caveat Santelli!!

I have really been having a tough time finding material of kortsessions lately.  Egregious hyperbole and fear mongering have been hard to find, considering the Euro/ Cyprus events of last weekend.  The media has been rather muted, as Cyprus, population one million, smack dab in the middle of the Mediterranean, did not get the talking […]

Session 15–“FBFH—Fed Bolt From Hell”—The Next Big Thing!

Actually “FBFH—Fed Bolt From Hell” may be the next big market-moving obsession, sniffed out and fleshed out by CNBC’s Jim Cramer (FBFH is an acronym Mr. Cramer coined).  This appears to be an undercurrent that the Street types tend to be buzzing about and may, according to Cramer, be the source of the market’s next […]

Session 14—“Buy, Sell or Fold?”

Or maybe a better question might be (ripping off the bard) “To be, or not to be (in)?”  No doubt you will get a plethora of views from the media as we move forward.  In kortsession 7 I made it pretty clear that I favor being a long-term investor on common stocks.  Having said this […]

Session 13—“One-Shot Wonders (Roubini)”, Why Do They Continue to Get More Guest Shots?

I’m not sure on this one, maybe it is because they were credited with making one spectacular call and the media still believes that their views are important and a draw.  Now I’m all about free speech, but some free speech may cost you money and opportunities.  Let me give an example. NYU professor, Nouriel […]

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