Against The Grain… then and now…

Okay, so I want to be very careful with this one, because I am absolutely not making a short-term market call! What I am saying is that exactly a year ago, as the market was careening lower amid the worst December since 1931, we remained steadfast in our then growthy (notably bullish) posture, despite staring into what turned out to be the steepest correction of this entire bull market.

Here are highlights from a few last-December blog posts:

Friday, 12/21/18

“The underlying data (slowing growth, yet still low recession risk) makes, per the following, for some upside risk for the market heading into 2019…”

Wednesday, 12/19/18

“…the stock market can send ominous signals about the prospects for general conditions going forward, but reacting to that sentiment in the face of an albeit slower ongoing expansion can be quite dangerous.”

Wednesday, 12/19/18

“…present general conditions (always subject to change) remain supportive of economic growth, and, thus, an ultimate continuation of the bull market — despite the present bout of extreme volatility.”

Saturday, 12/15/18

“Question: Why, with all of this volatility, aren’t we moving client portfolios to a defensively-biased allocation?

Answer: Because typically bear markets (20+% declines that take more than a few weeks to recover) occur amid economic recessions, and the data just doesn’t yet say “recession looming”.”

As you (clients) well know, we have now assumed a defensive posture, despite the fact that, ironically, the market is looking to log a very strong finish to the year. 

Bottom line, as was the case a year ago (despite the fact that the correction indeed resolved higher, as, per our commentaries, conditions at the time dictated), I am not forecasting near-term market movement, I’m simply explaining what motivates our positioning, and expressing our firm belief that smart long-term investing is never about short-term price fluctuations, and always about understanding underlying general conditions; which, as I summed up in Monday’s video, are currently suspect.

Nobody ever said it, or did it, better than Jesse Livermore:  

emphasis mine…

“In a bull market your game is to buy and hold until you believe that the bull market is near its end. To do this you must study general conditions…

 “One of the most helpful things that anybody can learn is to give up trying to catch the last eighthor the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent.”

“That is about all I have learned—to study general conditions, to take a position and stick to it. I can wait without a twinge of impatience.”


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