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Vancouver, B.C. (December
07, 2000): On Tuesday this week the markets
roared upwards. Many analysts are confident we've
turned the corner. Everybody is happy; the elevator
chitchat is humming. Even Nortel owners have something
to cheer. The Greenspan speech and the potential
presidential resolution are credited with the
joyous occasion. Seemed like Christmas came early.
CNNfn declares the Americas, yes
both South and North America, to be in rally mode.
Virtually everything surges. NASDAQ rockets up
10.5%, shattering the previous record. The World
Bank report said the global economy appears poised
for solid growth in the coming years as technological
advances and globalization have helped boost growth
prospects. No bears need apply here.
Now for Wednesday. Whoops! The markets
retrace a substantial amount of yesterday’s
advances. The Wall Street rally is abruptly cut
short. Pessimism returns again. Apple Computer
and Bank of America put out some bad news, they
become the scapegoats. Little mention of Greenspan.
Pundits and experts alike turn cautious again.
Seems that more bad earning reports are just around
the corner. What a surprise! Is it time for the
extra strength capsules to ease the pain?
In case you missed it, also on Wednesday,
CNNfn reported that Merrill Lynch, the largest
brokerage firm in the US, summarized the opinions
of more than 900 of its analysts and issued a
report. Guess what - Merrill Lynch concluded that
it expects economic growth to slow worldwide in
2001, but the US probably will not go into recession.
The Merrill Lynch chief global strategist recommended
at a press conference that US investors take a
defensive stance. Golly gee - where was he the
day before. I guess he missed the stampeding bulls.
Onto today - Thursday. Same direction
as yesterday. Motorola issues a warning and quickly
becomes the new scapegoat. Wall Street loses more
steam. Sluggish PC sales threaten softer earnings
for companies like Microsoft. Some selective downgrades
surface from brokerage houses. Didn't see any
new meaningful economic reports. Still no visible
signs of those bulls from Tuesday.
Okay, here is the tough question.
What has changed in 24 to 48 hours? Who felt the
whiplash? Have we learned anything from this roller
coaster ride? Did investors misinterpret the Greenspan
speech again? Did we catch another premature dose
of that “irrational exuberance”? Is
there an approved flu shot for this malaise? Did
we follow the lead sheep blindly over the cliff?
Who has the real story? Please stand up and be
counted (unless you're in Florida).
I'm anxiously awaiting tomorrow’s
exuberance, or if you like, the lack thereof.
Take your pick, or perhaps we’ll see both
on the same day. It makes for great elevator chitchat,
not to mention the new prognostications that we
are eagerly waiting from those same pundits and
experts. I predict it could go either way, perhaps
sideways. You choose.
All this to say that it clearly
illustrates the difficulty of trying to beat those
pesky markets on a daily basis. Investors who
play this game have to be ready for frequent and
unceremonious disappointments. The events of this
week are proof.
I believe the strategy that works
is to tune out the daily bumps and grinds, make
sure the long-term game plan is in place and adopt
proven investment policies. Take a pass on the
active micro management, sleep better and enjoy
those long-term results. Neither extra strength
capsules, nor “irrational exuberance”
flu shots are required in this camp.
We all know that successful wealth
accumulation is a marathon, not a 100-yard dash.
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