February 3, 2009

I Think It's Time I get A Hobby

The amount of politics that swirls around the markets theses days is actually trumping the markets themselves. I wake up in the morning and check out some headlines on my CFA feed and when I’ve had a cup of coffee I turn on CNBC and ready myself for the onslaught of self-aggrandizing ranting and opinionating. Now I’m a blogger so I have an excuse since, at least until I reach 15K viewers a day, I’m still not in the league that might require me to measure my tone on behalf of a wider audience. Not because I’m a sell out (although for the right price I could be) It’s because I believe that even if what I have say is shocking, or funny or dead serious, as long as it’s not boring (rambling is my weakness) it might be interesting to someone else, although I never take that for granted.

For example, I don’t see where the stock market, by which I’m referring to the broad indexes including the Nadaq and the Dow Jones Industrial Average, has any chance of regaining the spotlight it has held for the past 20 years. In fact I don’t clearly understand how so many people got caught up in the notion that the stock market was a proxy for economic growth. I would suggest that there are only 2 times in history where the stock markets raged in spite of wavering economic signals, in the 1920’s and in the 1990’s, and in both instances it ended badly for investors. While the decline in valuations that occurred in the early part of the century, it was tech specifically which took some of the heat for its former excesses it also took some of the attention away from an economy that was not keeping up with P/E estimates in general. The result is where we find ourselves now, 50% poorer than we were last year.

Now I’m not saying a rally can’t ensue in anticipation of some growth, especially where by any sequential measure it’s experiencing recession. But those rallies are a far cry from the kinds of rallies that were being hailed by the advisor community in favor of more and more unyielding investment choices. In my judgment we are entering a period of return that will be driven by stock selection and not in behaviorally unbalanced index investing.

So, on that note I ask the following, what would take for me to bring more readers into my internet space? While I’d love to think that my witty unraveling of confusing subjects might be a start, but I’d be getting ahead of myself. My goal is twofold, bring the facts as I see them and refer to those facts in my spiral research. If I present it in a manner that offers some content with fresh perspective, than I’ve succeeded. It’s not always easy to be fresh however the upside to my attempts is that I provide a forum that encourages people looking for a second opinion to seek it out. After all you wouldn’t take the word of a doctor without a second opinion why wouldn’t you extend the same logic to your advisor.