As January goes so goes the rest of the year... or something like that. Yes, we all know we are going to hear some nonsensical ditty like that for the next week or two. We have to steel ourselves from these bromides because, after a nearly 8% gain, the extrapolation will be the talk of the tape.
The ability of commentators to link non-linkable events with any surety always galls me. Will we have the identical circumstances in 2019: A Fed chief who almost crushes the economy and then relents and allows it to gather steam again? Is that on the agenda, too?
If we do, then history might, indeed, repeat itself. Otherwise, do we have to listen to commentators who gin up patterns about the market that have led people astray for ages -- and then ask to be paid in commissions for doing so?
I say each year stands on its own. I don't know a soul who predicted the disastrous December we went through. It was nauseating, out of nowhere, a bear market the likes of which no one I talked to or read foresaw. In fact, all I got was the opposite: When the year's doing well, you are going to end the year strong.
The percentages favored the bulls.
But here's the problem. Years are not football schedules and the collective line in football is often right, far more right than the collective line in the stock market. On the eve of the big game, we know that the odds favor the Pats. It should; that's call predictability.
But even then, let's face it, there's an oblong ball that's bouncing around and as the great, an unheralded Bert Bell, the NFL Commissioner from 1945 until 1959, would tell you, "on any given Sunday" there can be an upset.
That's what I think we should start saying to these prognosticators, because as I get older, I feel we have to warn people that this asset class is much less precision and much less lending to algorithmic behavior and much more about an oblong ball and chance.
Which brings me full circle to the start of this year.
The reason why we had such a good start is the same reason why we had such a bad end: A federal reserve chairman said things initially that would have caused an end to this particular business cycle because that was his goal. When he said he was willing to overshoot, that meant the cycle must be stopped to save the bigger issue: the rate of inflation in the economy. If the expansion had to be ended to stop inflation, then so be it.
In December, he figured out that his own words were poorly timed and that there were bigger forces besides the Fed that were doing the job of keeping inflation down for him. So he made up his mind some time after the Christmas Eve bottom to let those forces play out.
That's why we recovered almost 8%. It had nothing to do with the calendar -- and it will have nothing to do with the calendar. So hold your ears as commentators who should know better blather on about non-existent relationships.
The one thing I am certain about? Their confidence is misplaced, they will cost you money and they will never admit that their hubris and ignorance cost you money.