Looks like we got ourselves a ballgame

On October 15th, I officially declared the Relentless Bid era over (see There She Goes, My Beautiful World).

It wasn’t a bold call, markets had been acting differently since at least last August. Selloffs were occurring with more frequency and less stocks were rising as we made subsequent new highs. The days of “just buy anything” in the stock market had come to a close, the return of winners and losers, volume and volatility, was nigh.

Fast forward a few months later and it looks like we got ourselves a ballgame once again. The no-vol, sleepy grind higher has been replaced with all sorts of drama. Confusing economic data points abound. Global macro bullshit is back. People are talking about Greece like it’s an actual economy and not just an abandoned museum with $350 billion in debt.

I don’t know the real reasons for why BTFD isn’t working so automatically, so effortlessly, anymore. Neil Irwin at the New York Times says it’s because of currency fluctuation wrecking the earnings reports of US multinationals and because the drop in crude has castrated capex budgets from coast to coast. That all sounds realistic, sure.

But the why isn’t terribly important to me. The what, however, is very interesting.

I submit to you that this new phase of deflation fear and headline-humping is actually a good thing for both the markets and for the professionals – like myself – who work here.

Financial advisors, traders, hedge fund managers and other asset assigners cannot distinguish themselves when the only thing that goes up is the S&P 500 and it goes up every day, every week, every month of the year. We mostly waste our efforts and our time in that atmosphere, which had been in force for approximately 24 months straight until this winter. When investment profits become automatic for anyone who simply shows up, and diversification looks increasingly asinine with every quarter, we become almost useless – vestigial. 

Here we are, discussing hedges and protection and non-correlated asset classes and Value at Risk calcs and risk-adjusted returns and it’s like a giant f***ing joke as the ice cream man remains parked right outside our window. Any discussion of the risk of US stocks had become almost a non sequitur by the end of last year. “What are you even talking to me about right now? What risk?”

Now of course, consequence-free environments don’t actually exist in markets or in life – at least not for long – but even still, it was beginning to get really sad around these parts.

But the profits for just showing up aren’t quite so automatic so far this year and the large-cap US stock rodeo seems to be coming unhinged. Today’s 300 point Dow decline on the type of luke-warm data mix that used to be good for a hundo to the upside is yet one more piece of evidence that attitudes have changed.

There isn’t a single major US stock market average that’s in the green for 2015 save for the SmallCap 600, which is ridiculous; it’s like watching the jockeys run down the field at Belmont without their horses underneath them.

In the meanwhile the dollar is racing higher and so is gold, in what’s become a bad Buddy Cop flick without a plot.

Screen Shot 2015-01-24 at 8.24.01 AM

And despite the knock-down, drag-out bonanza earnings report from Apple we got this evening, blow-ups like we’ve seen in Caterpillar are much more common (the trifecta: currency woes, oil woes, capex woes all in one).

But again, this is not a negative, it’s a positive. Pros have a reason to get out of bed again and do their jobs. Vanguard may go a month or two without shattering an AUM record. And a much-needed dose of reality is being injected into the psyche of a hundred million investors. It’s not all Viennese dessert carts being wheeled out day after day. There’s some pain in this thing.

The paradox of stock returns is that stocks are supposed to carry more risks than bonds – and yet they out-earn bonds over the long-term, which should make them appear less risky, not more risky. When the extra return of equities is not being earned with extra risk, the game becomes flawed and the players become reckless. I’d argue that this is a net negative for the investor class, because of the bubbles it eventually leads to.

And so as a professional, and as a person, I’m glad to see an environment that forces us to earn our upside once again.

Game on.

Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

What's been said:

Discussions found on the web
  1. خرید گوگل ادوردز commented on Feb 11

    تبلیغ در گوگل ادوردز

    What is up it is me, I am also browsing this site on a normal basis, this web site is genuinely pleasant and the viewers are in fact sharing very good views.

  2. کولر صنعتی commented on Feb 11

    خرید کولر صنعتی

    Hello there colleagues, how is all, and what you want for to say about this submit, in my view its genuinely amazing made for me.

  3. خرید دوربین مدار بسته commented on Feb 11

    خرید دوربین مدار بسته

    I was curious if you ever thought of changing the layout of your website? Its quite well prepared I enjoy what youve got to say. But probably you could a minor more in the way of material so men and women could hook up with it far better. Youve got an…

  4. zand game commented on Feb 12

    zand game

    […]that will be the finish of this write-up. Right here you’ll uncover some web sites that we feel you’ll enjoy, just click the hyperlinks over[…]

  5. فروش طلا commented on Feb 13

    خرید طلا

    here are some hyperlinks to internet webpages that we link to for the explanation that we feel they might be actually really worth going to

  6. Samsung wholesale commented on Feb 13

    Samsung wholesale

    […]just beneath, are a lot of entirely not connected sites to ours, having said that, they may be certainly worth going over[…]

  7. سیستم cctv commented on Feb 14

    سیستم حفاظتی

    Just beneath, are a great deal of absolutely not related internet web sites to ours, however, they could be definitely really really worth likely over.

  8. work from home jobs near me commented on Feb 15

    work from home jobs near me

    […]just beneath, are quite a few absolutely not connected web-sites to ours, even so, they are surely really worth going over[…]

  9. خرید فیلترشکن commented on Feb 15

    vpn ایفون

    Hello would you mind allowing me know which webhost you are employing? I’ve loaded your blog in 3 totally diverse browsers and I must say this weblog loads a good deal a lot quicker then most. Can you advise a very good internet hosting company at a tr…

  10. travel work experience commented on Feb 15

    travel work experience

    […]we like to honor several other net web pages on the web, even when they aren’t linked to us, by linking to them. Under are some webpages really worth checking out[…]

  11. 100 kona coffee commented on Feb 16

    100 kona coffee

    […]just beneath, are many entirely not connected websites to ours, having said that, they are certainly really worth going over[…]

  12. دانلود رایگان قالب جوملا commented on Feb 16


    Great site! I located it while searching on Yahoo Information. Do you have any guidelines on how to get shown in Yahoo Information? I’ve been making an attempt for a even though but I never appear to get there! Thank you

  13. خرید vpn commented on Feb 16

    vpn ایفون

    Fantastic site! I identified it whilst browsing around on Yahoo News. Do you have any suggestions on how to get listed in Yahoo Information? I’ve been making an attempt for a even though but I by no means appear to get there! Cheers

  14. p spot stimulation commented on Feb 16

    p spot stimulation

    […]Here are a few of the web pages we advise for our visitors[…]

  15. breast play commented on Feb 17

    breast play

    […]the time to study or pay a visit to the material or web pages we’ve linked to beneath the[…]