A Change in Tone

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“Well, you see Willard . . . In this war, things get confused out there, power, ideals, the old morality, practical military necessity. But out there with these natives, it must be a temptation to be god. Because there’s a conflict in every human heart, between the rational and the irrational, between good and evil. And good does not always triumph. Sometimes, the dark side overcomes what Lincoln called the better angels of our nature. Every man has got a breaking point. You and I have one. Walter Kurtz has reached his. And very obviously, he has gone insane.”

Well, I think today I reached my own breaking point.

It’s quite evident nothing is going to stop this market from going higher. Not beheadings in Iraq. Not radioactivity in Japan. Not rising inflation in the United States. Not $19 trillion in debt that can never be paid back by the United States. Not high P/E ratios. Not insanely-valued tech startups. Not even crucifixions (yes, crucifixions) that ISIS is performing in the Middle East. Nothing.

Bernanke and Yellen have proved themselves the king and queen of equities. Whatever stops this madness could be years off. There is no “shot across the bow” yet. If you think back to the financial crisis, there were pretty obvious cracks appearing in Spring of 2007, giving you an enormous amount of time to get ready. Markets don’t just suddenly crash in an instant. It takes time……..sometimes a long time.

As an experiment, a couple of weeks ago I asked myself: if I were “forced’ to buy stocks, which ones would I buy? (I called this my “Post-Draghi” portfolio, since I was thinking this through after Draghi made his negative interest rate announcement). I came up with a few dozen stocks and placed a hypothetical purchase of about $20,000 on each of them. Below is the spreadsheet.

ss

As you can see, this little pretend portfolio is up 3.64% versus the S&P 500 being up 1.12% in the same timeframe. My picks – – and let me emphasize here, no selections were eliminated, no matter what their performance – – beat the market by over 200%

So the thing is, if I may say so, I truly am a good chartist, and when I apply these skills to long positions in an uptrending market, they do pretty damned well. In spite of this blog’s reputation as a “bearish blog”, the Longs category is one of the biggest in the category cloud. So you’re probably going to notice a greater shift to long ideas since, frankly, they make money, whereas shorts are typically getting nailed to a tree.

OK, so rhetorical question time: does this mean I’ve become a raging bull? Will I not talk about short ideas anymore? Do I no longer yearn for this market to crater? The answers are no, no, and no. But yearning isn’t going to change a damned thing.

I’ve had it up to the proverbial “here” waiting for the market to fall. It just isn’t happening. And the folks in Gainesville have managed to offer up excuses and rationale for five years strong now about why things are going to turn down Right About Now, and only God knows how many billions of dollars of forsaken profits can be attributed to following that kind of thing. That’s a club I no longer want to be a part of, and I’m happy leaving the end-of-the-world to Bob as well as Tyler over at ZH.

I really have no general market commentary today, because there’s not much one can say about a market in which every important index is at highs never before seen in human history. But I did want to say I’ll be making a concious shift sharing more long ideas here since, let’s face it, they tend to have the support of a very powerful four foot tall white-haired woman.

And for those thinking, “Ha! Capitulation! This is the top!” Well, that’s precisely what I thought when Hugh Hendry made his famed “can’t look at myself in the mirror” surrender to the bulls last November. And in case you’ve forgotten…………the market is up quite a bit since then. It was down a little in January, yeah, so there was a brief “ha!” moment, but the fact is, Hendry can look himself in the mirror, and he can also afford a French maid to keep that mirror very, very clean.

So if I’m a “perma” anything, it’s “perma-chartist.” I believe in technical analysis to my core. As for the perma-bear thing……….I’m four years too late, but……….I’m done.

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