Every day's a challenge for me to stay positive, to stay constructive. Every day. The weekends in particular are horrendous. People I have discussions with mock the averages -- and given my generally constructive attitude toward stocks, chide me. It's usually an all-out assault.
The most obvious avenue of assault? Of course, the linkage between a dysfunctional Washington and what amounts to a roaring, rotating bull market.
This weekend I found myself in a complicated position. You see, after the healthcare-debate debacle, I've become unrelentingly bearish on Washington.
Friday was the last straw. On CNBC's Squawk on the Street, we interviewed Mick Mulvaney, the director of President Trump's Office of Management and Budget, who came on talking about tax reform. Given how little has gone right, and emphasizing how Congress is possessed about health care, I've become skeptical that anything can get done. I found myself begging Mulvaney to just go for a win and focus on repatriation of capital from overseas, knowing that it would be positive for the U.S. Treasury and for new jobs.
At first Mulvaney misunderstood me and seemed to think I was against the entire package, which includes lower corporate taxes and a far-more-simplified tax code. "No," I said, "I just think you've got to get something done. Anything."
He told me (like everyone who speaks for Trump and the president himself) that something will get done -- no problem. Don't worry about it.
Well, I'm plenty worried about it. I'm worried that these Republicans can't even pass a debt-ceiling bill because they're so mired in the pursuit of an Obamacare repeal and replace. I can't imagine that something so comprehensive and so huge in its ambitions as the president's tax plan has any chance of getting through.
So, when the negativists bore down on me for the flaws of Washington, I didn't argue. I did say, however, that given the strong earnings we have seen so far this quarter, and the low interest rates and lack of alternative for investment, I have no choice but to overlook the shenanigans and disorganization of both the legislative and executive branches of government.
Next, North Korea. Here's another tough one. What do I say to someone who says: "How can you own stocks with North Korean missiles pointed at us?" That hasn't happened since the Cuban Missile Crisis -- the difference being that the Russians were rational. North Korea is anything but.
Again, though, I struggled to answer. I do get the sense that Trump will have to take action. The endless attempts to get China to help us seem rather pyrrhic, especially given that China actually seems to favor the North Korean regime's dangerous behavior and doesn't fear any retaliation we can muster. Given that the president literally just took steel tariffs based on national defense off of the front burner, I have no idea what leverage he thinks he has beyond that.
No matter. I, again, am convinced that it's worth it to have some cash on hand. We've raised some for my Action Alerts PLUS club for investors based on a "World Is a Dangerous Place" scenario.
However, I don't want to leave the market because of it. Needless to say, if the unthinkable happens and North Korea launches first, I won't be all that concerned about my money. I don't know if you will be, either.
Then there's the "The Market Is Totally Expensive, Ridiculously Overpriced and Has Run Far Too Much for Way Too Long" objection, which is truly pervasive. This one's a constant. Some of these people follow me on Twitter and are, in their own way, chiding me because I like Nvidia NVDA (the hottest stock in the market) so much that I renamed our dog "Nvidia." Of course, my wife Lisa was there with quick with a riposte that "Special Ev," as my daughter calls our dog, doesn't answer to Nvidia unless I have a treat in hand. True.
But I get the issue. The chatter? People don't get so glib about dog names at a market bottom. They do so at a top. The flaw in the thinking? I've been naming cats after stocks for ages. It's a "tell" of nothing but my obsession. Hey, I call myself "Mozart" whenever I'm in a line for food to be made at the snack bar, for fear someone will take my lobster roll ahead of me given my common first name. So, let's not sweat that program.
Still, I plead guilty to one count and innocent to the rest. I acknowledge that some stocks -- notably the FANGs -- can be considered overvalued at these levels. It's true that Amazon (AMZN) and Alphabet/Google (GOOG) , (GOOGL) are well below where they reported, and Facebook (FB) threatens to take out the price it stood at before the company reported that magnificent quarter.
Here again, though, I'd like to talk about how the key to the bull is its rotational nature. That concept's been blasted repeatedly as lame, yet it has tremendous cogency.
Just think of Monday. We got a bull market in things (i.e., cable TV), given talk of Sprint (S) and Charter (CHTR) combining -- something that could pass the "Where There's Smoke, There's Fire" test. We've got money pouring into drugs, even being attracted to Bristol-Myers Squibb (BMY) after a most-disappointing quarter. We've got capital flowing from expensive cloud-based stocks to relatively inexpensive stocks like Texas Instruments (TXN) , Intel (INTC) , Microsoft (MSFT) and Qualcomm (QCOM) .
After a total annihilation, we even have money rushing toward retail stocks ever since Amazon's quarterly report. The subtle reasoning? Even with Prime Day, Amazon has failed to wipe out its bricks-and-mortar competition. Plus, after its disappointing quarter, some question whether Amazon has the firepower to pressure bricks-and-mortar retailers more than it already has.
That's why Walmart (WMT) could be closing in on its yearly high, and why Costco (COST) is clearly breaking out here. Home Depot (HD) seems to be on the rebound, too. And suppliers -- VF Corp. (VFC) , PVH Corp. (PVH) , Columbia Sportwear (COLM) and Nike (NKE) -- broke out a long time ago.
I also can't resist telling people about how they are so often neglecting the prowess of individual managements. Go on the earnings call for Boeing BA and you will be flabbergasted to hear analysts point-blank ask if the fabulous results were real and spectacular. It was almost like a Seinfeld episode!
I invoked my interview with Mike Corbat, CEO of Citigroup (C) , as an example of another stock that's simply inexpensive by the numbers. I mentioned how there's so many ways to win, even with old stodgy companies like Procter & Gamble (PG) , Automatic Data Processing (ADP) and Dow Chemical (WD) through board challenges and activism.
As far as the age of the bull? I think that's the top-down talking. I analyze the actual stocks in the market and there simply aren't the cracks that appear to be developing from the overall basket of 500 stocks.
All of this falls on deaf ears. People's minds are pretty made up. And just to be sure, it's an all-walks-of-life view.
But let me leave you with this tidbit of innocent evidence. In 1928, it was well-known that shoeshine boys around the stock exchange were playing stocks with borrowed money, which was viewed as a sure sign of the top. That anecdotal evidence finds its way into every tome about that era that I've ever tackled.
So today, I get my shoes shined, having worn them into my beloved garden on Saturday. What's the shoe-shine man want to talk about? How he sold almost all of his stocks ages ago because they were too risky after a big run. He left a ton on the table.
Did he care that there's no real upside. Not one bit. In 1928 it was "Safety Last." Now it's "Safety First."
Now, once again, I am not going to ever fight someone who wants to take a profit, especially because we told members of our Action Alerts PLUS club (which chronicles moves that could and are made by my charitable trust) that taking some profits into this week of earnings makes a ton of sense given the market's run.
But what's my goal? Nothing more than to roll into some stocks with lower risk that are beaten up (including retail), because the risk seems mooted.
In the end, I didn't change a soul's mind. In fact, the only person who's in sync with me is a member of the AAP club.
You know what? Maybe in the end, that's what really keeps the market higher. The skepticism is and has been so darned thick that until we get others naming their pets after cloud stocks or touting stocks while shining shoes, I'm going to remain constructive on the future of the asset class known as "equities."