May 12, 2013
Weekly Market Outlook
By Keith Schneider
After finally turning off banks of computer screens this Friday, we (Mish and I) headed off to dinner, connected the iPhone into the Range Rover's stereo, tapped the Pandora icon and immediately the song "I'm learning to fly" by Tom Petty came blasting thru, which I thought captured the current stock market sentiment with these lyrics:
"I'm learning to fly, but I don't have wings.
Coming down, is the hardest thing"
The past 13 years have been hellish for most investors and it may now only be seeping into their hard-wired brains that the worst might actually be over. The adjustment to this paradigm shift is not natural for us humanoids after coming down so hard. We humanoids tend to focus on the most recent experience. Investors had to endure financial meltdowns, high unemployment, terrorist attacks, mutual fund and mortgage banking scandals, insider trading, and multiple wars in a relatively short period of time. This is similar to the generation that lived through the depression and never forgot the hardship. However, as the US equity markets hit new all-time highs, a reality check is needed. The tactics employed during such turbulence in the very recent past may no longer apply. This rally is still one of the most under invested rallies of all times and many investors are still wary of Wall Street. While pondering this, as if on cue, this morning we got a call from an old friend from the trading floor who was shrewd enough to sell her stocks in August of 2008 and has been sitting in cash ever since. She asked us if we thought it is safe to get back in the water. If in fact this is the Zeitgeist, then there is a lot more upside to come.
This is not to say that short term we are not running rich which brings us to this week's video...
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