Good morning. One of the most interesting comments I received in my
email inbox yesterday suggested that I was reading too much into the
market's volatility and that since there was no cloud of radiation
wafting over Tokyo, the bulls should be good to go. The sender went on
to opine that with the economy doing well here at home, we ought to see
the market get past the emotion of the moment in relatively short order.
I will have to admit that this comment definitely got my attention. Perhaps I was watching the action a little too closely. Maybe I was reading too much into the violent swings that are clearly the result of computer programs. And maybe, just maybe, I was allowing myself to stray a little too close to the bear camp's point of view.
As I've mentioned a time or twenty, I am a card carrying member of
the glass-is-at-least-half-full club. I believe it was late 1994 when I
learned that while the bears do enjoy their day in the sun every once in
a while, it just doesn't pay to be Debbie Downer for too long in this
business (remember, stocks go down three times as fast as they go up).
As such, I'm always on the alert for my emotions straying too far from
the center line.
In rereading yesterday morning's modest rant, I will have to admit
that I may have been a little hacked off. In short, I'm concerned that
the extreme volatility is ruining the game for an awful lot of
individual investors. You see, the very folks who threw up their hands
at the end of 2008 and vowed that they were never going to invest in the
stock market again have reportedly seen the error of their ways and are
now getting back in the game (this according to the ICI flow of funds
data showing something on the order of $33 billion in new money having
been plunked into equity funds in the first 2.5 months of the year). And
what are they greeted with? Well, not exactly the strong market
everyone on the street was predicting.
Other than my silly sentimental concerns for the players just getting
back in the game, I'm also a little concerned that a prolonged
corrective phase in the stock market may convince the U.S. consumer to
'just say no' to that new fill-in-the-blank. And just like that, we
could quickly be staring at another soft patch, which could leave
employers deciding to hold off on making any new hires for a while
To be clear, I'm not suggesting that any of the above will actually
occur. I'm merely looking at the possibilities. And I am well aware of
the fact that there is always a chance the stock market will decide that
none of the negative headlines matter and just resume marching merrily
higher. However, should this period of negative headlines and extreme
volatility continue for much longer, I believe the odds of the bulls
being "good to go" could easily diminish.
So, while Ms.