The dispiriting days just eviscerate your confidence, don't they? They are hard not to take personally. What did you do wrong when you thought that maybe a bank stock was cheap because it sold below book value, historically where a stock really is cheap provided it is tangible and scrubbed? What did you do wrong thinking that Gilead (GILD) would have a big number and you bought more and more on the way down, and then it does, and it is the wrong day and maybe it goes down?
How could you be so off buying Carnival (CCL) last week when its largest cost -- fuel -- is going down while its biggest revenue sources, tickets and on board expenses, are going higher? Yet you were crushed yesterday because of what happened at Royal Caribbean (RCL), which, may I state for the record, wasn't all that bad to begin with.
Do you deserve to get your lungs ripped out buying Southwest Air (LUV), the best, most consistent airline in terms of long-term profitability, at 8x earnings, knowing that those estimates might be too low if bookings stay strong and oil keeps going lower? I mean, you got the direction of oil right, you got the capacity right, you got the ticket prices right, and yet you still got clobbered.
I can spin these tales all over the place, tales of stocks being fundamentally cheap vs. any historical metric and it means nothing, nothing at all, especially when you compare the yields of the slower growth stocks and the potential capital appreciation of the high growth stocks.
But it just doesn't matter... until it does, although we have no idea when it will.
Look, I am as fed up as you are about how stocks could be so capricious and divorced from both the current and future fundamentals as I think they are.
But so what? They are. We have to collectively get over it and find ways to beat it: higher dividends, huge earnings upside, a sense that something much better than expected is about to happen. Tall orders, all. And even when they happen you get a company like Action Alerts PLUS charity portfolio holding Alphabet (GOOGL) up 60, that ends up just 10 points higher.
We can blame the Fed for not making things clear. We can blame the futures and algorithmic folks for programming the machines the way they do.
Or we can just face something that I have been toying with for months now: We have a flawed asset class that doesn't trade on anything but whim, emotion and the basket it's contained in. Nothing changes until either management breaks up a company or sells out -- and even then, in the last few months that doesn't matter.
Look at Allergan (AGN), Tyco (TYC), DuPont (DD) -- Dow (DOW), and Starwood (HOT). They all act as poorly, if not worse, than stocks that aren't involved in combination.
Maybe that's just more evidence of what happens when you take the animal spirits out of stocks and just shoot them.
In the old days, when I traded with Karen Cramer, she would sit there and short every rally and buy the dips, but less each time because she said "look, you just have to let this market take itself to where it wants to go. To where there are no more sellers. Where you would feel like an idiot to sell."
In some ways, that's what has to happen here. But in some ways, given that there are more machines making decisions than people, they just don't feel the idiocy the way humans did.
So the pain, arguably, has to last much longer than it would in the old days. And that's just what's happening, with periods of oversold rapture that make you wish you were 200% long for a brief moment before they cut your head off again.