Wednesday, August 5th, 2009

The hit song from the 1940 Rodgers and Hart musical Pal Joey provides a good tag line for the 2009 second quarter’s investment commentary.  To provide some more insight, let us first look at some lyrics:

I’m wild again, beguiled again, A simpering, whimpering child again,   Bewitched, bothered and bewildered—am I.   

In the musical, Vera Simpson, a wealthy, bored and married socialite falls for the charming heel Joey Evans, who seduces her, separates her from her money,  then dumps her.  Sound familiar! There is not much transference required to see how the song works as a corollary for most people’s investing experience over the past eighteen months.  After a year which for many investors resulted in both major losses and a high degree of shell shock, the first half of 2009 has shown some improvement with the S&P 500 being in the black by 3%. But it took a 30% plus rally in the second quarter to achieve this.   

Although conditions both in the market and the overall economy have improved somewhat in the past few months, there is still a fair amount to be bewitched, bothered and bewildered about.  For the past two decades we the investing public were  happily “bewitched” by the equity culture with encouragement and cheer-leading from the likes of legendary fund manager Peter Lynch, (One Up on Wall Street) who told us that we could all find the proverbial 10-bagger if we kept our eyes and ears open, and Wharton Finance Professor Jeremy Siegel (Stocks for the Long Run),  who still strongly advocates staying fully invested in  stocks and ignoring whatever the market is doing in the short run—i.e., less than 100 years.  Those are fine sentiments when investing is less of a blood sport than it has been for the past 18 months. Yet for many, this time it was different:  having experienced a  severe decline which for many people eradicated their gains of the past decade, there is much trauma, blame and bother to go around. That brings us to the current state of bewilderment— fretting about whether our budding green shoots will blossom or turn to yellow weeds. There are compelling arguments for both.  The US economy has moved past Point A  (“A” perhaps standing for Armageddon) but how to get to Point B is less clear.  The last quarter and July have produced encouraging upside surprises in company earnings reports as well as some economic indicators.  But unemployment numbers are discouraging and according to commentators such as Morton Zuckerman and Roger Lowenstein, the statistics do not accurately mirror the worsening reality.  Despite the improvement in business inventories, consumers are still not spending and home prices remain in the dumps.  How lagging these indicators prove to be is the $64 question. 

Remaining agnostic about the stastical barrage may prove to be the best course. This will likely result in seeking out sensible opportunities but using risk management strategies to guard against a reversal.   Besides the song from Pal Joey we can also gain some perspective from a popular play that premiered two years later in 1942, Thornton Wilder’s The Skin of Our Teeth, in which the heroine tells us:  “Don’t forget that a few years ago we came through the depression by the skin of our teeth!  One more tight squeeze like that and where will we be?  My nerves can’t stand it.”  Maybe it is deja vu all over again, but as in Wilder’s play, the capacity for survival and renewal appears to be trumping our most dire predictions.


На мой взгляд, это интересный вопрос, буду принимать участие в обсуждении….

I’m wild again, beguiled again, A simpering, whimpering child again,   Bewitched, bothered and bewildered—am I…..

Alex Gordon
April 2, 2010

Есть конечно пару красивых моментов, но я ожидал большего!!!…

The hit song from the 1940 Rodgers and Hart musical Pal Joey provides a good …

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