Dumber Than the Average Bear?

 | Oct 27, 2011 | 11:00 AM EDT
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The people who are smarter than the market are getting their heads handed to them. The people who think that nothing good can ever happen have lost control of the situation. The people who say, "This isn't a permanent fix and we will revisit it" are going to find out that we might revisit the issue at a much higher level.

I never want to be smarter than the market. Let me tell you a story. In 1988, I grew possessed that there was no way at all, none, that we could work our way out of a slowdown in the economy. I was particularly bearish on technology, which had been the leader in the market. I could not possibly see anything that could reignite tech and I wasn't able to find any reason to think that the stock market could get any momentum.

Sure enough, Intel (INTC) was working on a new chip that was so powerful and so cheap that it ignited a wave of personal computer buying that took the world by storm. At the same time, we realized, collectively, that the crash the year before most certainly did not signal a recession, as so many kept waiting for. Meanwhile, we were hit with an unprecedented wave of takeovers from overseas -- so great that we began to wonder if too many of our companies were being taken over, that maybe we had to shut down our borders to mergers because there were so many.

The Dow stood at 2098 when I was outthinking the market. More important, the Nasdaq traded at 186. That's right, 186. It didn't take a breath until 2000 when it traded at 4600.  That's right, 4600. After the PC explosion came the email wave and then the Internet tsunami.

The market never looked back.

I could have lost my business, overrun by positives I did not see and fooled by my own negativity, which was sorely misplaced.

I think of that now because I don't know a single smart individual who believes in this rescue package in Europe. Not one. I have heard it called "Pollyanna," and I have heard it dismissed as just plain chicanery and fraud. I have seen it disparaged as a half-baked plan that doesn't include any capital raising and doesn't solve the problem of all the bad sovereign debt in Italy and Spain, let alone Greece. The fix, as it is, isn't in.

My problem with that thinking lies in 1988. Ever since then I have been fixated, some bears would say plagued, with what could go right. What happens if there is enough time to nationalize banks and have them work out their jams? What happens if the Chinese decide, hey, there is some momentum here, let's get in? What happens if Europe's economy starts to grow? What happens if, now that the day-to-day pressure is off, Europe can fix the currency in a way that either makes it so there is one central bank and one resource for all, or there is a tiering that works for everyone?

No, I am not smarter than the bears. I just have history on my side -- my own history. And I am not abandoning it just because, unlike Yogi, I am dumber than the average bear.

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