Have you ever noticed that the talking heads are all bearish whenever the US stock market turns even slightly lower. For example, today the major US indices were all lower……but by less than 1%. That didn’t matter. On CNBC it was all about how in the near term there will be a correction in the equity markets, but viewers should go ahead and buy stocks now anyway because they will only go higher in the future. I also find it interesting that CNBC can/does work the recommendation to buy stocks into EVERY story. I am not saying anything new. You readers already know what I’m talking about, but it still makes me chuckle because one of my central tenets is to avoid following the crowd. Not that being a contrarian is always the correct course of action, but as Warren Buffett says, “it’s a nice pond in which to fish”.
For the last year there have been many investors waiting on a pullback. (Of which I have been one). I thought it was interesting that CNBC reported several pension funds, such as Calpers for instance, fired hedge funds recently for being bearish…….and ultimately wrong. Does this mean the last few bears are being shot and everyone is turning bullish?!! Unfortunately not, but it does mean that continued under performance of some hedge funds will force them to employ greater levels of leverage (and make riskier bets) in order to make up some relative performance ground. Eventually global equities will correct, the when and how is the question.
On that front I believe some of my past comments have been misconstrued. I do not believe that equities are a massive bubble, destined to decline by 90%+. While I believe global equities to be artificially elevated by central banks and their low interest rate policies, the only true bubble I currently see is in the credit markets themselves. I just wanted to set the record straight, because I’ve received some interesting comments on the topic. I am expecting a correction, and my wife and I will buy stocks from our watchlist when such a correction materializes. Interestingly enough, I very nearly bought Visa (V) yesterday as the stock price pulled back following a disappointing outlook. I actually placed a buy order, but later canceled it. It was a mistake, but one I hope to rectify next week. I would like to give a shout out to my friends who did pick up a few shares today, including fellow blogger JC……good job following through buddy. Visa is one of those brands with a nice moat and steady pricing power. It’s not cheap, but it’s not expensive for what you’re buying. More and more I’ve been thinking Visa is an inflation hedge as well……which I hadn’t previously considered.
Last, but not least…..I want to share a dirty little secret with all of you readers. In public I’m a people watcher, but online I’m a comment reader. You know, one of those snarky people who read the comments at the bottom of the financial media’s “articles”, in order to chuckle at the silly things people say. Sometimes, the comments actually make sense too…….but it’s always a mixed bag. I particularly enjoyed the comments on this article today on Yahoo Finance.
Do you like to read other people’s comments online, or eavesdrop on their financial conversations? I know I shouldn’t, but there are worse vices out there