Jeff Saut (Raymond James Chief Strategist) is out with his latest commentary today and it opens with a killer quote from the famed investor, historian and economist Peter Bernstein…
“I have opted for more conservative ideas and not aggressive ones.”
“After 28 years at this post, and 22 years before this in money management, I can sum up whatever wisdom I have accumulated this way: The trick is not to be the hottest stock-picker, the winning forecaster, or the developer of the neatest model; such victories are transient. The trick is to survive. Performing that trick requires a strong stomach for being wrong, because we are all going to be wrong more often than we expect. The future is not ours to know. But it helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances. Being wrong comes with the franchise of an activity whose outcome depends on an unknown future (maybe the real trick is persuading clients of that inexorable truth). Look around at the long-term survivors at this business and think of the much larger number of colorful characters who were once in the headlines, but who have since disappeared from the scene.”
Jeff uses this quote as a springboard for a discussion about remaining conservative this year in the midst of the great start the market has begun with. His commentary echoes much of what we’ve been talking about here, the idea of being okay to take the lower-reward, lower-risk road regardless of what the hot money is doing in low volume and a break between storms.
It is important to note that two years ago, Saut got cautious right around this time of year as well – and we all know how the market fared shortly after (Flash Crash, Euro Summer Part 1, etc.)
You can see it here from 4/19/2010):
Anyway, back to the grind – stocks are reasonably valued, all hell is about to break loose in Europe between bond spreads and the elections, our own debt ceiling
debacle debate reignites this August, China is lying about everything, etc.