The Markets
In the 80’s a TV commentator famously threw darts at the WSJ page of stock listings. The dozen stocks selected by his darts outperformed managed money. This led to wide circulation of the random-walk theory and doubt about investment managers. This was all forgotten as the 90’s got underway and folks were making money hand over fist.
Should we, again, be throwing darts? Part of me says yes. As the tide of optimism lifts all ships we are, in effect, bailed out by our lack of knowledge about individual companies and their valuations. Confidence can be a dangerous thing but it just feels good when we buy by the symbol, not knowing what the company does. Who cares? The symbol went up! So, it is fun to participate in. And we like the money. The other part of me wants to make more money that simple dart throwing can produce. So, I lean toward the most active list, the new high list and volume leaders. Why not, for example, put a bundle into the Financial Bull 3X ETF (FAS)? This slot machine moves three times as fast as financial shares. It was up 20% yesterday and is already up 10% this morning. This is not an investment, of course, but a trading vehicle. It is designed for day traders and I will participate from time to time. However, the long term tracking performance for many ETF’s is circumspect.
So, my take is to speculate but still rent shares, not buy-n-hold. My portfolio’s cash position has gone from 90% in early March to around 20% today, And I rue that 20%, wishing I had put it to work. But I don’t want to forget the disquieting feelings of January–early March. So, I will continue to harvest gains from shares I know little about and put the proceeds into something about which I know a little.
And this from the Shark, whom I find myself quoting more and more: Finally- every one bashing the President as the market dropped in his first few weeks in office – well look now – since inauguration day the SPX is +14.2% – and if you look at how the last guy did – who was universally loved by business – 8 year return on the SPX -40%.
