Wednesday, September 12, 2007
The following is a voyeuristic peek into a meeting of the Stamford, CT branch of "Bears Anonymous", held a Rippowam High School....
(Camera pans on participants taking their chairs , seated in a circle in a schoolroom (a dozen or so men and women of varying ages. The moderator, a clean-cut optimist, who is always "fully invested" clears his throat and begins...)
Moderator: I'd like to welcome everyone this evening. I understand this is a big step for the mere act of admitting you have problem is the first step to overcoming it. We have a number of new faces here tonight and I'd like to welcome all of you, as well as those are returning. First and foremost as we are here to share our problems, support each other, so we can begin the road to recovery. Remember: the only requirement for member ship and attendance is that you must refrain from going Short. (Moderator turns to early-thirties man) Let's start with you, Sir. Please Introduce yourself and begin...
Chuck: Hi everybody. My Name is Chuck, and I am a bear. I have had a bearishness problem for a long time. Not just a predilection for the usual contrarian stuff, which when I look back I have had since I've been a child, but a real nagging and pressing fear that the financial sky is about to fall at any moment.
I don't know where it first began. Maybe it was 1987. Yeah, that scarred me. I was naive and long and got slapped 20% that day in Oct 87. I tried to get out, but ended up at close to the levels at which it closed. A couple of years worth of savings that was!! But things recovered, and I was out of the market and then I didn't get back in because they looked like the world was really were going to end with thirld world debt, S&L crisis, and the massive commerical real estate crash that was seemed bound to cause a depression. In 1991 when the UAL deal exploded - you know all those Reagan deficits coming home to roost - I thought that we were set for an ever deeper recession, but I was wrong, and again uninvested when the market started rallying. The come 1994, and the bond market exploded and it looked like the end again - budget deficits, trade deficits, political gridlock and still working off the thriftbank and S&L issues, not to mention the near-destruction of the texas oil patch and agricultural sectors. Damn! If that wasn't enough to keep me out of the market, I don't know what is, but it did, and I reckoned I'd get a better opportunity to get in soon.
Then came large cap cap growth and technology speculation. Germany and Japan were in near-depression, yet investors are paying silly prices for pharma and global large cap growth. Who would thought they could continue to grow like that and justify the high prices? Not me. Missed it again.
All the while, I told myself: "It's ok. It's good to be prudent. The reckless will suffer like the Okies of the 30s. And, it's only opportunity cost. Better one in hand than none in the bush". And I probably had a hundred other justifiactions and rationalizations for my bearishness.
1998 came along and I was finally proven right with the unraveling of LTCM and bitchslapping of Russia! Now we would finally see the deleveraging yielding to parsimony that was needed to return assets to value and redeem America's sense of thrift! So I sat on the sidelines, waiting for the real blood in the streets. But the Fed cut rates for fear of Y2K, the tech bulls ploughed ever-more money into the market. Some said don't fight the Fed, but I rationalized my bearishness that the Fed was "pushing on a string" and their efforts would have no effect.
The market did crash in 2000 - the tech and dotcom market anyway - and the broader market stood at 5 year lows, but I looked back to the financial history of the 30s and thought when it hit its lows in 2002 that this could continue for a decade, especially with a war imminent and, with near-zero rates, it really looked like the Fed was pushing on the proverbial string. So I sat tight, waiting for a better entry point.
Then weak dollar, credit bubbles, twin deficits, foreign accumulation of US reserves, muddling war in Iraq, incessantly rising energy prices and peak oil, and on each occasion - Aug 04, Mar and Nov 05, May and Nov 06, Feb 07 the market swooned, corrected, only to rally even more strongly out of the trough as if it were teasing me, taunting me, seducing me then mocking my now increasingly irrational fears and bearishness. And they were irrational, they must habeen irrational right? for the market continued its inexorable rise on each occasion, laying waste to the rationalization or justification of the day for NOT being long long long.
It's taken nearly twenty years - almost the entire length of this grand new experiment in seemingly unlimited and unrestricted credit - for me to realize that this is MY problem. The world is just the world, and its not going to end tomorrow, and that its better to suffer with the fools in the event the system unravels, than sit idly by and watch alone, a big pile of savings become a small pile of savings.
In turning over a new leaf, and recognizing that I have a bearishness problem, I have terminated my subscriptions and vowed never again to read Stephen, Roach, Marc Faber, David Tice, Dr. Hussman and Fred Hickey. I will not read Martin Wolfe, and will make Investors Business Daily my read of choice in the financial markets. I will personally go and apologize to Vic Niederhoffer and Charles Gave for all those less-than-nice things I said about them. Further, I have placed 50% of my money into a Vanguard global equity Index Fund, and also have vowed not to look at its asset value more than once a quarter. I have taken 25% of my funds and placed in them in a global balanced fund, and earmarked the balance for disciplined allocation on any subsequent drops, and for global growth funds. I have also asked my doctor to prescribe some little blue pills that will help me see the bright side of life, and stop being so pessimistic. I have told me secretary NOT to hang up on salesmen that cold call for you never know when a good idea might fall on one's lap through a seemingly altruistic phone call. And I am going to stop all that stupid exercising and dieting in a bid to become "fat and happy", enroute to my ultimate goal of being fat, happy, AND lucky!!
My name is Chuck. And I have a bearishness problem. But I have now acknowledged my problem in hope that such recognition is the first step towards getting better. Thank you.
(applause of other members, camera pans on circle and focuses in on upon late twenties girl with tears in her eyes; Camera fades out, other members get up and give Chuck a group hug.)
(NB: While the author neither admits nor denies having a bearishness problem, the above account is entire (well, mostly anyways) fictional.