S&P 500 over the previous 12 months      

  April 1, 2020

An On-Line Publication of the Anonymous Anything Society

(Phil is experiencing computer problems and has asked that this prescient commentary from 2 years ago be reposted)

  I do not own one of the highly touted diagnostic tools available for computers, that are supposed to tell the "day trader" when to buy or sell any or all of the "products" available to the speculator today. The really big traders have computers tied to the markets by optic fibers and computer programmers constantly striving to fashion computer algorithms (programs) that can provide microsecond advantages automatically. We scufflers in the crowd do not stand a chance of prevailing in this robot technology.

  Once upon a time, I trusted in certain metrics: Just as the ancient Polynesians who could sail a primitive outrigger canoe across thousands of miles of ocean currents in all sorts of weather, I learned some of the basics of forecasting major moves of prices that did not go far beyond reading tea leaves. This faint insight was expensive.

  It took me more than three-quarters of a century to learn some rather simple axioms relative to the markets, the most important of which is: Trees have yet to grow as high as the skies. Lesson Two: Fear trumps greed  Prices can fall in a matter of microseconds. the prime example in my lifetime took place in the moments following the assassination of President Kennedy. My radio station's office and studios were then in downtown Tucson, a half-block away from a branch offices of one if the world's major stock brokerage houses. It was there that I learned Lesson Three:

  The pivot from a Bull (ascending) market to a panic Bear (falling price) market can be astounding. I happened to be returning from lunch on November 22nd of 1963. The first intimation that something was amiss was the pushing and shoving of grown men fighting and shoving at the entrance of the brokerage house. At the time, the electronics connecting Tucson with Wall Street was primitive. I soon learned of the shooting in Dallas and the effect that it had on that place in Tucson where a few old men usually gathered to smoke cigars and watch the profits made on the sale of their grocery store in Ames, Iowa erode. Now the entire system that was usually reflected in the movement of prices on a big screen on the wall was seized up.

  Market collapses are born out of overconfidence. A contrarian, I warn those close to me to always beware of The Bear. As you read this, know that the markets are making new highs, but each swing of the pendulum indicates to me that on every up-tick, the market is losing what in real life physics would be a pendulum that is losing kinetic energy. If you wish to recognize the absolute red flag warning, study a chart formation called "The Head and Shoulders Top." Since it appeared in 1925, it became the bellwether for technical analysts, forecasting a drastic drop in prices.

  The financial markets are presently over-valued. Moreover, prices and profits will not grow forever. At the least, Wall Street is overdue for a major correction. Therefore, in a time of uncertainty, some months ago I liquidated all of my holdings in the stock market, even in Warren Buffet's beloved Coca Cola.

  What more can I say? Oh yes, one final observation: Every stock brokerage house one sees advertised on TV cannot be the best.

Phil Richardson, Observer of the Human Condition and Storyteller. "He goes doddering on into his old age, making a public nuisance of himself."—Joseph Menchen

Our unending thanks to Jim Bromley, who programs our Archive of Prior Commentaries

Respond to: k7os@comcast.net 

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