November musings...

Well... There are many things that come to mind when sifting through the daily onslaught of information sent my way. At a pace of about a mile-a-minute, I scrounge through endless positives and negatives on the markets going forward. Establishing a solid stance is not easily attainable... There are "bulls" and "bears" out there... People whom are able to take a stubborn stance either on the daily trend, or counter intuitively to that trend, defiant in the face of individual and media driven adversity. How can one truly address the markets as "black or white"? As an Investment Professional, I must follow an unwritten doctrine to "buy low/sell high", and leave all personal feelings and emotions at the door. To follow a strict discipline and not get enticed into the "hype" of the masses. After all, that is how the few make money and the rest "donate" to the cause. But where to begin?

1. The Markets are Cheap: Buffett's buying... This sale is not going to come again for a life time. But, as a fellow colleague put it; "Sure the P/E of the markets are being touted as "cheap", but those ratios are not truly reflecting their actual values. Currently based on company earnings priced in "before" the full effects of credit-tightening, we must then discount the shorter-term, future earning of many of these companies, thus "increasing" the true P/E ratios of the Markets that we must consider at this point in time." So "cheap" is arguably a possible overstatement.

2. However, from an advisory standpoint, we must be the champions of positivity, and any immediate source of strength to our argument will act as catalyst to encourage sentiment going forward. After all, is it not the "ripple in the pond" effect we are looking to advocate in times of uncertainty and media sponsored negativity?

3. History. History. History. Like Law, the best of what we have is based on "precedence". And amazingly how often history does tend to repeat itself. The movie playing on the TV may be set in a different place or time (in this case maybe Mars), but the underlying story is the same. Most cannot see past that, and in turn buy into the school of catastrophe and unwarranted discern. We must be a student of the markets. We must also have the capacity to check emotions at the door to be able to see clearly the lines in history that prepare us for what's to come. (It's the best "crystal ball" we've got. And a conscious part of my developmental path as an advisor)

There was a great line from an interview with Nick Murray on defining a "Bear Market" that I would like to share: "A Bear Market is an extended period of time during which people who think this time is different, hastily sell their equity to people who know there is no difference.”

It seems like the "baby has been thrown out with the bath water" as masses of people flee the markets to the false safety of "cash". And in this I do agree that this "sale" will be one of the greatest opportunities of a life time.

Now... To only check those emotions at the door...