Nowhere to Hide – The Other Side Of The Relentless Bull Market

It’s hard to get excited about the inevitable bounce when I know the bull market is over.

In October of last year I knew we would see last week. Now it seems really obvious:

The real warnings will show up in the price action. You can keep the TV off.

Companies will eventually disappoint. Stocks will start falling on good news.

Facebook and Nvidia trade at 15 times sales. Of course it’s possible that earnings, sales and traditional metrics are outdated, but when the markets turn those metrics will come back in vogue. They will be the way of gauging how far stocks might fall.

In the meantime, as long as the indexes continue to rise in the face of sinister behavior like that of Equifax and Wells Fargo, do not apologize or be shy riding this trend.

So here we are.

At the moment there is nowhere to hide. My pal Charlie Bilello has the definitive post on where we sit in 2018. Read it.

My friend Jon Boorman nailed how I am feeling at the moment:

There are times where analysis becomes fairly useless. Fundamental and technical. A stock was cheap before it’s now cheaper still. Oversold gets more oversold. One extreme after another. We’re stretching a rubber band. It either springs back or it breaks, and we don’t know when.

Morgan shared this great Munger quote from 2009:

Michael Batnick has the data on the 15 bear markets of the last century. The context:

If U.S. stocks are entering a bear market, they likely have a ways to go before they reach a bottom. You can see where we currently are (red) versus the 15 bear markets we’ve had over the last century (DJIA). The selling might be jarring because the speed at which it’s happened, and the absence of any short-term relief, but this chart should put today’s declines in perspective. I’m not saying this doesn’t hurt, but there’s a big difference between pain and trauma. We ain’t seen nothing yet.

In conclusion…

Investing is hard.

PS – My buddy Joe shares this post every year as a reminder that there is more to life than money

Also published on Medium.