The Crazy Train To Bull Eternity

Once again I have to disclaim that at the moment (and for quite some time now) I hold not one single short position, in anything. I am only long US and global stocks. But also managing cash and portfolio balance as usual while feeling as though I’m playing a game of Musical Chairs while the music still plays (nothing nearly as good as Keith’s style, which has always resonated with me beyond most others).

I have to disclaim the bull positioning because book talkers tend to talk their book. My book is only long insofar as I have equity positions because in a manic up phase I have little interest in eroding the situation with short hedging. Besides, gold stocks are doing that balancing job right now and that balancing act has been working well since June.

Anyway, here is a tweet from a well followed commentator that is framed so logically and paints the 2008 crash as merely a blip that you or I could do standing on our heads.

This is $SPX annual chart (each bar = a year)

The chart goes back 75 yrs; a long enough period which included many crises, panics + wars – yet how many red bars do you see?

Nobody knows when the next red bar will show up; but in the grand scheme of things, does it matter? pic.twitter.com/VWQJBMw6fQ

— Puru Saxena (@saxena_puru) January 8, 2020

Equities… just stay in and prosper! No problem in real time because the US stock market always comes back… ALWAYS. This is the kind of stuff that appears near tops; like stuff that uses ultra long-term yearly charts in log scale to smooth out the problems.

So the next time this happens, try to forget that it was caused by epic policy distortions within the system the likes of which have been amped up exponentially since and just remember it’s actually a smooth ride assuming the next thing is like the last thing and you live long enough to reap the benefits.

Allow the Macro Tourist to expand upon the theme…

He notes that CNBC anchor Becky Quick got into something of a competition with her wealth manager guest, who is only 80% exposed to stocks. Becky’s all-in at 100%!

Greedy or Fearful?

However, I would like to point out that Becky was not bragging about this allocation at any time during the past decade. No, she has chosen December 2019 with the S&P 500 up more than 360% since the bottom to let us know about her over-allocation.

Herein lies my point. Just like this summer when bonds had already ripped 13 handles higher, market participants usually express this sort of arrogance at points when they feel confident. Extremely confident.

What do I take from this? It’s not the time to be reaching for exposure. I don’t need to know anything else except that CNBC anchors are competing with their guests about the size of their stock allocations.

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